BALTIMORE (Stockpickr) -- The bulls have been largely absent this week following two days of selling for broad-based indices. Yesterday's selling was especially brutal for investors who'd been hoping that the short holiday trading week would be quiet. The S&P 500 shed 1.43% by Tuesday's close.
But that selloff isn't a major cause for alarm just yet. It's put the S&P back down around support at the 50-day moving average, a level that's already acted as a price barrier early in November. Now, with the historically bullish Thanksgiving holiday just a trading session away, stocks should have an ideal opportunity for a bounce higher.
But even as the broad market continues its undulations, the charts of some of Wall Street's most heavily-traded issues are pointing toward more convicted technical movements.
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.
made it on yesterday's most-traded list after the company announced earnings that beat analysts expectations for the fourth quarter of fiscal 2010.
Shares gained more than 2% despite the market's overall bearish leanings, a good sign following the double-digit slide shares have taken year-to-date. Now, with a retest of resistance following Tuesday's earnings gains, this stock could be poised to win back some of that lost ground.
Shares of HPQ are retesting resistance just below $45 right now, a level that the stock failed to move above in a previous attempt this month. Now, however, those solid earnings could send additional bullish pressure behind shares as new buyers flock to pick up shares at a discount.
So does it make sense to buy shares of Hewlett-Packard? Not yet. With resistance still overhead, there's far less room for a run-up to the upside.
I'd suggest waiting for a break above that horizontal blue line before becoming a buyer. If shares fail to make their move, expect a slide back down to the 50-day moving average before a third try at $45.
iShares MSCI Emerging Markets ETF
is one of the most popular exchange-traded funds on the market for investors seeking exposure to stocks based in emerging market nations.
Although this non-U.S. index ETF has largely mirrored the performance of major U.S. market indexes this year, a bearish pattern could change that as this ETF slides lower in the final month of 2010.
Right now, EEM is forming a bearish head-and-shoulders pattern, a setup that's characterized by three tops, the middle of which (the head) is higher than the outside two (the shoulders). At the base is shoulder level, the price level below which a potential downside trade triggers. As of yesterday, shares of EEM are testing shoulder level.
That staging puts EEM in a somewhat precarious position as traders of this high-volume stock take notice of the pattern forming in shares. A break below $44.50 will be the trigger that most traders are watching for. If we see a confirmed slide below shoulder level, expect a potential price target of $42 in the short term.
>>Who Owns EEM?:
Let's turn our attention to another ETF that's been getting attention for its heavy trading volume: the
ProShares UltraShort Crude Oil ETF
This ETF is a leveraged short fund, which means that it seeks twice the opposite performance of the index it tracks. In the case of SCO, that means that this fund seeks to take on a double-leveraged bet against the price of oil. So how is this fund setting up to trade right now?
Earlier this week, SCO broke above the 50-day moving average, a level that acts as newfound support for this fund's share price. That significantly reduces downside risk for traders hoping to bet in a drop in oil prices. An uptrend in SCO puts a reasonable price target for this fund at the 200-day moving average.
That said, the sheer trading pressure on crude oil coupled with major limitations of leveraged ETFs make this a poor instrument to hold for the long-term. If you're hoping to collect a small upside move in the short term, that's one thing, but I'd suggest staying away from this fund unless you're comfortable trading complex exchange-traded funds.
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.