BALTIMORE (Stockpickr) -- Despite a slight market rebound late in yesterday's trading session, there's little question that August 2010 has been a difficult month for investors. Already broad market indices, such as the S&P 500, are down more than 4% on the month, while market volatility (as measured by the VIX index) creeps back higher toward the highs we saw earlier this Spring.
But even as bearish sentiment appears to gain control of the market, value investors are enjoying new buying opportunities with price levels well off of 2010 and even 2009 highs.
So, what's an individual investor to make of it all?
For some semblance of clarity, let's take a look at the technicals.
uses a stock's price movements to determine where shares are headed in the future. Technical charts are used daily 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.
at how some of the biggest names on Wall Street are trading technically.
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Search engine giant
has taken its knocks along with the rest of the tech sector in the last month.
The Mountain View, Calif.-based company has seen its shares slide more than 7% in August. That disappointing performance comes despite the fact that just over a month ago the company announced a 23% top-line increase, the fourth consecutive quarter of revenue growth despite economic headwinds. Investors shouldn't be too shocked -- this stock could have further to fall in the near-term.
Shares of Google have been falling since the company broke down below the 50-day moving average in mid-August. With little in the way of support until the $440 level, it's unlikely that shareholders will see a reprieve from selling until the company sheds another $14 and change from its share price.
An upside trade could materialize on a bounce off of that $440 support level, but don't think about putting your capital on the line until the bounce is confirmed. Right now, the best play on Google shares is a waiting game.
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Home improvement retailer
has shone lately despite a tough economic environment thanks to proactive management anticipating soft sales and slashing costs in kind. Shareholders could see some payoff soon -- the company's stock price is getting squeezed toward a potential breakout.
Shares of Home Depot have been forming a bullish ascending triangle pattern since early July, creeping closer and closer to a potential break above resistance at $29. But with the 50-day moving average crashing down toward the company's share price -- a result of the shellacking shares took in May and June -- it's becoming make-or-break time for this technical setup.
If you want to take this trade, wait for traders to react to the moving average. Consider a stop below the uptrending support line, around $27.50.
Who Owns Home Depot?
There are more than a few reasons why traders focus on the
SPDR S&P 500 ETF
. Besides being the first widely traded exchange-traded fund on the market, and one of the most heavily traded, this fund tracks the performance of the S&P 500 index, a good proxy for the market as a whole.
While there's little question about the bearish currents on the street right now, a look at the technical picture being formed by SPY right now suggests that while the direction -- lower -- may be correct, the magnitude isn't as bad as it may seem. The SPY has been forming a bearish head and shoulders pattern for the last month or so, but while the pattern is a popular one for financial headlines, it's one of the least reliable.
Right now, a fairly strong support level exists at $103, which could be a near-term bottom for this fund -- and a good place to start buying again.
Who Owns SPY?
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.