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Monday, May 31, 2010

Weekend Winners and Losers for May 28, 2010

Winners and LosersThis post is a combination of our occasional Weekly Review and the Weekend Winners and Losers available at Alert HQ.

Today we have the following stock picks and signals:
  • Reversals based on daily data, we have 20 Alert HQ BUY signals and 9 SELL signals
  • Reversals based on weekly data, we have 2 Alert HQ BUY signal and 331 SELL signals
  • We have 24 Bollinger Band Breakouts based on daily data and 170 Breakouts based on weekly data.
  • We have 605 Cash Flow Kings
  • 76 Swing Signals -- every one is a BUY signal
  • 18 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 4 stocks that are new additions to the list and 3 that fell off the previous list.
  • 28 Trend Busters based on daily data of which 21 are BUY signals. We also have 183 Trend Busters based on weekly data (all are SELL signals!)
  • 179 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. We see 66 downside gaps and 113 upside gaps based on daily data. We also have 36 Gap Signals based on weekly data.
The view from Alert HQ --

This weekend shows some normalcy returning to the Alert HQ signals. There are some BUY signals on the Trend Busters list where it had been all SELL signals recently. The Trend Leaders list seems to have bottomed out. Upside gaps outnumber downside gaps by a reasonable number.The Reversals based on daily data have a modest number of BUY signals and a small number of SELL signals.

Where things are still a little wacky is on the Swing Signals list where we again have nothing but BUY signals. This is an unusual occurrence that has been happening only during the last week or so of this current downturn. Also unusual is the preponderance of SELL signals on the Reversals list based on weekly data.

What all this indicates is that things are settling down but we are not yet back to normal. A look at some of the numbers we track at Alert HQ may help put things in perspective.

In the chart below we count the number of stocks above various moving averages and count the number of moving average crossovers, as well. We scan roughly 6400 stocks and ETFs each weekend and plot the results against a chart of the SPDR S&P 500 ETF (SPY).

SPY versus the market, Moving Average Analysis, 05-28-2010

The yellow line showing the total number of stocks above their 50-day moving average has dipped down to levels last seen at the March 2009 lows. There is a bit of a rebound going on now and that is a hopeful sign. The magenta line showing how many stocks still have their 20-day MA above their 50-day MA has plunged straight down and no rebound has occurred yet. About the best that can be said of this chart is that maybe things won't get much worse. Thus far, there aren't many solid signs of recovery in evidence.

The next chart provides our trending analysis. It looks at the number of stocks in strong up-trends or down-trends based on Aroon analysis.

SPY versus the market, Trend Analysis, 05-28-2010

The yellow line showing total number of stocks in up-trends has fallen about as low as it can go. The red line showing number of stocks in down-trends is at an elevated level but not at a record high. Once again, there's not much good that's evident in this chart. It does make a case, however, for saying that we are due for a bounce.

The outlook --

Though the Dow and the S&P 500 are still struggling, the NASDAQ (and QQQQ), the Vanguard VTI Total Market VIPERS (VTI) have at least recovered above their 200-day moving averages and that's a good sign. It is often significant when an index or stock tests the 200-day MA and is able to close above that level. It is usually a sign that things will be getting better.

Yesterday I wrote a post detailing my arguments why stocks are not over-priced, especially considering how oversold we are. You can read it here.

Which leads me to say that from both a technical and a fundamental viewpoint, stocks should be ready for a bounce. Let's just hope the European situation doesn't derail what should be an imminent recovery.

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