As the S&P 500 nears a long term trending resistance, weekly MA(50), and short term resistance, it may be time for bulls to take profits and shorts to pile in. The markets will have a very tough time breaking above 975 (basis the S&P). This rally is way overextended… I would like to see a pullback to the March lows.

This bear rally has been driven mostly by greed and impatience as cash heavy funds have been dumping low yielding treasuries to chase stocks. There is a TON of liquidity lying around right now, and most of it is denominated US dollars that have been rapidly losing value. Investors are eager to put their worthless dollars to work whether it is in equities or commodities, both of which have enjoyed big gains as the dollar has plummeted. The fundamentals like unemployment and foreclosures continue to deteriorate. The only bull case for equities right now is that inflation is starting to creep into the markets.

There is a lot of turmoil in the bond markets as the cost of borrowing increases. If this sell-off in treasuries is not contained, it will foil the Fed’s plan to artificially suppress mortgage rates and this whole web of debt will unfold.

JW is back in action.

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Nucor Corporation and its subsidiaries engage in the manufacture and sale of steel and steel products in North America. NUE is a tough stock to analyze in my opinion.  It is in one of the leading industries in a horrible market, i.e. steel, yet its broken its longer term uptrend.  The company recently announced another common stock offering for $74/share which may have contributed to recent action and high volume trading.  Trading  purely on technicals, I would say stay away.  Then again this could be a decent pullback in a leading stock. Nothing is absolute, so I think if NUE goes 5-10% lower, I think I would dip my toe in the water and see what shakes out.   What are your thoughts on NUE?

Well, how about shorting cheesecake factory, symbol : CAKE.  The stock has been weakeaned by the overall economic downturn.  Less people going out to eat due to higher gas prices and those chosing to dine out not going upscale restaurants is presumably the theory.  Technically, the stock looks like its going lower.  It recently gapped down on relatively high volume.  The ADX which measures the strength of a trend is very strong.  MACD trending downward.  Overall, I think shorting CAKE may be a decent trade in the coming weeks.  Here is the six month charts:

I am going on record and buying a bunch of X puts. I think todays run up to $173 is it for a while. I have been having bad luck on the downside of some stocks (VISA) so i wont be surprised if this bites me in the rear. I will post some charts later in the week that have been going well for me.

I could not help but read the comments on Brett’s call for shorting Visa and the other conversations around shorting Apple.  I have to disagree with both calls.  Visa is not a short because everyone thinks its going to be the next Mastercard.  Visa actually makes more money than Mastercard.   I’m wondering what the catalyst would be for Visa to drop?  I really don’t see any.  They reporting GOOD, not great numbers but the bottom line is that you really can’t fight the tape and expect to win.  I would BUY visa on a pullback.   The stock is may reach $100 in 6 months.

 Shorting Apple now may make a little more sense given the move from 120 to where we are today, but  I still contend that that is risky as well.  I think the stock will ramp to $200 until the 3G iPhone release and maybe pause there.   Fundamentally, how could you justify shorting apple now anyhow?  The company is minting money and hoarding crazy amounts of cash.  They have the best tech CEO in the Biz in Steve Jobs and everyone knows its a matter of time before the iPhone becomes the 800 pound gorilla in the cellular business.  Their PC business is taking share from other competitors at an accelerating rate.   I just do not get the short call on Apple, especially not the long-term.    

Last week I mentioned Walters industries.  The stock was in the low 70’s/high 60’s at that time.    Today, the stock broke out on huge volume of over 5 Million shares.  WLT closed out at 81.58 up 8.65 on the day.  The stock has been on fire for the past year.  I’m not one to chase a breakout but I think this might be an exception.  

 Other stocks that look ready to run higher:

United States Steel (X) - New 52 week high today.  Volume however was unimpressive.

Potash ( POT) - Stock resuming uptrend after very brief pause.

Intrepid Potash (IPI) - I took small position today.  I think it moves much higher.  Could be similar to Visa in terms of IPO’s on the mover.

Google (GOOG) - Money managers are coming back into GOOG after blowout quarter.  One year from now GOOG could be making new highs again.  I think anyone who bought GOOG before the last earnings and the subsequent 90 point day may a great decision.  This was a classic risk/reward situation where the risk was certainly worth it.  I don’t think it too late to own the stock.

JPM is my favorite financial bar none.  I’ve liked the stock for several months now, but I took a small position recently.  I like it as a long-term investment.  They have the best CEO in the business in Jamie Dimon.  They basically stole Bear Stearns.  Think about it:  they didn’t even flinch when they paid 5X their original purchase offer for Bear Stearns.   The deal is going to add serious earnings power to JPM.  They also have the least amont of exposure to the subprime mess.   I think this stock can trade in the $60’s next year.  Here is the chart:

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I am taking a short position in V at $77.00. My stop is right above the high of the day.

As we all know, oil has been on a monster run. Looking at this chart, I see a great opportunity to make money on a short position once this stock reaches $100. According to the chart, if this stock reaches $100, we should see a correction worth a few points or so. I really hope it gets to $100 because I am going to buy alot of puts and try to cash in. So call me crazy, but this stock is about to be shorted!

I like AMZN at these levels.  I think the stock got sold off after earnings that were really good.  I like the AMZN play going into the second half of the year.  With gas prices expected to reach $4-$5/gallon, I think a lot more people will think twice about going to the malls 10 times or more during the holiday season.  I think AMZN benefits from this.  AMZN is still growing and is a profitable company.  Higher gas prices I think is another reason why AMZN looks good here going into the second half of the year.

Per Yahoo:  Walter Industries, Inc., together with its subsidiaries, provides a line of products and services, including coal and natural gas, furnace and foundry coke, slag fiber, mortgage financing, and home construction worldwide.   They announce earnings on May 1.   This stock chart is unbelivable for this market.  It has been in an uptrend for awhile.  I keep waiting for a decent pullback but its not happening.  Here is the 1 yr chart.

Just a quick reminder that Mastercard, one of my personal favorites, reports earnings on Monday April 28.

Yeah, I said it. DHI reports earnings on May 6.  They will probably be dismal. Technically, the stock doesn’t look bad.  The stock may have bottomed and is now forming an ascending triangle.  Supposedly,  DHI is a well managed home builder who has the financial strength to manage thru the depression in the housing market.  Anyhow, this stock may need to be watched over the next few weeks.   Here is the 6 month chart:

The beaten-down-tech-stocks-that-might-be-recovering theme continues with EMC.  The stock has been halved recently.  Yes, they are subject to a slowing economy but that isn’t going to last forever.  I think the stock is attractive at these levels.  The company is a leader in its field and continues to make money.  It also holds a large portion of VMW, a former tech IPO darling who has also gotten crushed recently.  The chart looks like EMC will move higher. 

BRCD is a long time tech company that has recently gotten crushed, plain and simple.  The stock was riding high last year when it reported poor numbers and then it was game over.  Well, looks like Broadcom isn’t dead yet.  The stock has broken out of a 6 month downtrend.  The uptrend is strong based upon the ADX reading of 31.   BRCM has had an orderly recovery over the last month.  I have no price target on the stock and have not researched earnings releases, etc. but in terms of the trend, I don’t think it going back to the previous March lows. I think BRCM is a good risk on a pullback.

Yahoo Profile of CVD:  Covance, Inc., a drug development services company, provides early-stage and late-stage product development services primarily to the pharmaceutical, biotechnology, and medical device industries worldwide.  This stock has been a big winner in the biotech area.  Cramer gave it a buy signal several months ago before the market correction.  Technically the stock may be at a crossroads.  It has challenged the 200 day MA a couple of times now.  The stock I think will remain around current levels until quarterly earnings release on April 28.  I’m not sure if I would take a position prior to earnings but I think the report will give a hint as to whether the stock totally breaks its uptrend or we are just in a correction and the stock moves higher from here.  Here is the chart.

RIMM is a stock most people know.  They make the Blackberry devices that so many business types carry around.  The stock was a stellar performer in 2007 however experienced a substantial correction this year in sympathy with the entire market.  Looks like RIMM may stake claim along with Apple and Google as the resilient tech leaders on the Nasdaq later this year.  The stock has no exposure to the subprime meltdown and recently reported a solid quarter. The stock has formed a base and is challenging its old highs.  I think RIMM is worth watching.

This chart looks fairly decent. After almost a year we are testing a new high. The chart is telling me that we are going higher. We may retrace down to $80 before heading back up. I am taking a small position now and reloading if we get to $80