Combing for Winners in the Nasdaq 100

It's January, the month when all sins are forgiven and every stock becomes a potential winner. What better time to look at long-term trading opportunities in the Nasdaq 100?

You already know the Nasdaq 100 got pummeled after the bubble popped before bouncing last October with the broad market. In fact, it lost an astounding 84% of its value in that two-and-half-year nose dive. The index keepers appear so worried about its future that they try to resuscitate it each December by pulling tech stocks and adding lower-beta components.

Unfortunately, all they've done so far is turn new additions into fair game for short-sellers. Maybe they've never heard about the law of unintended consequences.

A look at the index shows both good news and bad news right now. The good news is that there are more bullish patterns than I've seen in months. The bad news is that most components still show bearish patterns without sustainable bottoms.

Because this is January, let's accentuate the positive and look for long-side winners in this unfortunate index. Besides, it's a lot more fun than chasing nose dives in the fourth year of this amazing bear market.

Symantec (SYMC - commentary - Cramer's Take) sells software that keeps bad things from happening to your computer. The company's products are incredibly popular because they've become necessities in this era of viruses, trojans and hackers. The stock's weekly chart reflects this success story and suggests that it still has considerable upside. Symantec shows a very bullish three-year triangle that has just broken out to an all-time high.

Teva Pharmaceuticals (TEVA - commentary - Cramer's Take) dropped with the broad market after the 2000 top. But it recovered quickly and has been grinding back toward the old high for the last three years. Teva just traded above that important level in late November and pulled back into a sideways pattern. There's a good chance the stock will build a base here and rocket through the old resistance soon. This could set up a very strong rally to $50 or above.

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Alan Farley is a professional trader and author of The Master Swing Trader. Farley also runs a Web site called HardRightEdge.com, an online resource for trading education, technical analysis and short-term investment strategies. At the time of publication, Farley did not have any positions in any of the stocks mentioned in this article, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Farley appreciates your feedback and invites you to send it to [e-mail]. Also, click here to sign up for Farley's premium subscription product The Daily Swing Trade brought to you exclusively by TheStreet.com.

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