I'm sure the market pundits are going to come out again and try to call the end to the financial problems and banking crisis with the failure of Lehman Brothers (LEH Quote - Cramer on LEH - Stock Picks) and Bank of America's (BAC Quote - Cramer on BAC - Stock Picks) purchase of Merrill Lynch (MER Quote - Cramer on MER - Stock Picks).
I know I sound like a broken record as I continue to warn investors to completely avoid this sector, because I've said it before -- no one knows for sure how deep this problem goes, and my research shows the risks to be extreme. I'm not just talking about the apparent problems in companies such as
Wachovia (WB Quote - Cramer on WB - Stock Picks),
Citigroup (C Quote - Cramer on C - Stock Picks) and
AIG (AIG Quote - Cramer on AIG - Stock Picks) -- which lost 70% of its market value yesterday -- I'm talking about the $150 trillion or more in derivatives held by U.S. banks, and several times that amount globally.
The most worrisome part of all this is that a majority of those derivatives are traded outside of regulated exchanges, and many companies keep them off the balance sheets and disclose them to investors very discreetly in small print.
I have no idea how this will work out and there's always a possibility that this situation won't blow up, but if it does, it won't be pretty. On Monday,
CNBC.com had an exclusive interview with Wilbur Ross, chairman and CEO of WL Ross & Co. He said that he sees "possibly as many as a thousand bank closures in the coming months." Mr. Ross is a very sharp money manager, and I would certainly urge investors to check out the financial stability of their bank.
That said, I know the news across the board is quite gloomy, and I'm tired of focusing on the negative developments in the market. So today I want to take a look at a few stocks from a technical perspective there are holding up quite well in all the market volatility and give readers some possible opportunities on the long side. (Of course all of the companies highlighted are far away from the financial sector.)
Let's take a look.
Resmed (RMD Quote - Cramer on RMD - Stock Picks) has been acting quite well during all of the recent market volatility. The stock broke out of its seven-month downtrend in early August and has continued to trade above the important 200-day moving average over the last month. Even during the morning hours yesterday when the market was trading down sharply, the stock was holding his ground very well.
That type of strong relative strength is often a hint that the price is ready to move higher. You can also see at the bottom of the chart that the institutional money stream continues to hold at the highs. A break above $48 may be the beginning of a new move higher.
Northwest Pipe (NWPX Quote - Cramer on NWPX - Stock Picks) has also been acting very well over the past couple of months, consolidating a symmetrical triangle formation.
The key here will be for the price to break above the upper trend line on an increase in volume; I would also want to see a continued confirmation from the institutional money stream. A price break below the pattern would be a signal to exit any positions.
FedEx (FDX Quote - Cramer on FDX - Stock Picks) has obviously been benefiting from lower oil prices, as it recently broke above the important 200-day moving average after holding the support of the 50-day moving average for several weeks.
The stock certainly appears ready to at least test the $100 resistance level in the near future. You can also see that the money stream at the bottom of the chart remains in a strong uptrend, supporting the recent move.
A slightly different idea is the
CurrencyShares Japanese Yen Trust (FXY Quote - Cramer on FXY - Stock Picks). It also looks ready to break out of its six-month downtrend and begin a new leg up.
The FXY recently edged above the 200-day moving average; it will be important to see increased volume and confirmation from the institutional money stream if the price continues to make its move.
Again, I have to caution readers about the extreme volatility likely to appear in the coming weeks. As always, in markets like this, investors need to use conservative money management and keep protective sell stops under support areas on every position.
Even though situations like this show up in a down market, I would continue to keep a large percentage of cash on the sidelines.
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Mark Manning
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