BALTIMORE (Stockpickr) -- "The market is oversold!"
That's the trader battle cry that's been driving stocks for the past few days --including the Thursday rally that pushed the Dow 1.6% higher, the largest single-day gain since Nov. 4.
That oversold status shouldn't come as too much of a surprise after the two-month rally that preceded November's correction. Now, with the market's descent halted (at least temporarily) by yesterday's buying, let's take a look at the technicals for some of Wall Street's biggest stocks to get a grasp of what's going on with the markets.
In case you're not familiar, technical analysis uses a stock's price movements to determine where shares are headed in the future. Technical charts are used every day by proprietary trading floors, the Street's biggest financial firms and individual investors to get an edge on the market. And according to some sources, skilled technical traders can bank gains as much as 90% of the time.
So which major stocks are worth looking at? Here's this week's look at how
are trading technically.
to be getting some added attention next week following the first day of trading in shares of
GM's IPO has been one of the most highly anticipated events of the quarter, and in those cases, it's not surprising for peer companies to see added buying attention. That could be especially good timing for Ford, a firm that's sporting an attractive price setup right now.
Ford has already distinguished itself to investors. The Detroit automaker holds the unique position of being the only Big Three carmaker not to need government funds to keep its doors open. As a result, the company has become a Wall Street darling as its fundamentals have improved quarter after quarter. Now, after a substantial push higher in the trailing three months, this stock looks primed for another leg up.
Shares have been consolidating between $16 and $17 all month while the market took its breather. With a newly formed base, and a battle-proven support level at $16, this stock should have upward potential on an exit of that consolidation channel. Wait for shares to break above $17 before going long.
Things aren't looking quite so bullish at
, a banking stock that's seen shares fall precipitously in the past several trading days at the hands of a series of analyst downgrades.
Most damning is the downgrade the firm's debt took. With its notes ranked just above junk status now, Regions' cost of capital has increased enough to scare investors away. The technicals don't tell a different story, either.
One of the old clichés of technical analysis is that you "never catch a falling knife." Trite though that advice may be, it's true in the case of Regions right now. Shares fell through a long-standing support level at $6.20 on the downgrade news, and price action has been volatile to the downside ever since. With no semblance of support yet in place, I'd strongly caution long-side investors to not attempt to call the bottom.
Instead, if you want to bet on shares of Regions, I'd suggest waiting for the selloff to cease, and buy shares after support has been set. Once that's happened, set your stop-losses just underneath that support level.
Another high-profile selloff has been in shares of
, the networking giant that saw its shares make a massive gap-down last week. In Cisco's case however, support has been set at $19, a previous ex-resistance level from back in July 2009.
Tentative though that support may be, it's at least present in Cisco's chart right now, which should prompt some additional buying pressure to at least attempt to make-way back to the gap that shares opened below on Nov. 11. I'd suggest placing a stop at $19 if you're thinking about going long this stock right now.
That said, buyers beware: with resistance right around $21.50, any upward momentum could be short-lived. Stay vigilant if you're planning on trading this stock.
To see this week's trades in action, check out the
-- Written by Jonas Elmerraji in Baltimore.
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At the time of publication, author had no positions in stocks mentioned.
Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.