After 2 weeks of Rally – Time to be VERY Careful and Six Short Ideas (BBY, GPS, SRE, PEG, BXP, AVB)

The market rallied off its lows of June 7th with many stocks breaking above their downtrend lines.  This caused me to put out buys on a variety of stocks which have outperformed the market as a whole.  The Dow Jones Industrial Average and the S&P 500 have run into the resistance of the 50 day exponential moving averages and have failed to rise above this resistance for 5 days now.  This causes concern and means your sell stops should be tightened and you should be VERY careful with your longs.

One note on volume stocks today - with the FINREG negotiations going on in Washington D.C., both MasterCard (NYSE: MA) and Visa (NYSE: V) traded 2.33x and 3.34x their average daily volumes and moved higher. Keep an eye on these stocks.

Now, a look at the stocks I put a buy out on over the past week, most recent first;

With the all time high in gold I mentioned Eldorado Gold Corp. (NYSE: EGO) and Barrick Gold Corp. (NYSE: ABX).  With the big currency news out of China today, gold got hit over the head (-$24) and neither of these worked out.  This goes to remind everyone that a commodity/currency like gold is subject to a lot more news than just a stock.  A commodity stock is also subject to currency moves and news pertinent to said commodity, therefore they are riskier stocks to invest in than a regular comapny stock. This being said and after today's major currency announcement, the EGO and ABX stock charts both still look good and I am still a long term bull on gold and the gold miners. EGO and ABX are two of the best gold mining stocks on the market.

Aetna Inc. (NYSE: AET) pre-announced they would beat analyst expectations and jumped above all three of its important moving averages.  Today AET dropped back below the MA’s and this does not mean it will not report above analyst earnings, just that the chart is weaker today than yesterday.  I would sell stop this stock at $29.59.

NVidia (NSDQ: NVDA) jumped higher today and sold off all day, just as the market did.  Market weakness will most likely bring it lower. Exercise caution.

Johnson Controls Inc. (NYSE: JCI) was upgraded by Morgan Stanley and jumped higher.  Unfortunately, this stock’s 50 held it back and it is down 68 cents (-2.83%) since the buy point.  This stock trades below $28.34 and get out. Morganb Stanley upgraded the stock on fundamental metrics and they do know what they are doing but, in the end, price action is all that matters to a stock owner.

I recommended Ctrip.com International (NSDQ: CTRP) on an ascending triangle breakout Tuesday night of last week.  If you had bought the stock at $42 on last Wednesday’s open you are up 9.05% already.  This is a Chinese stock and they all went higher today.  The target for the triangle pattern is about $50 to $53 but a down market could keep this stock from getting there.  I would take profits in a third of your position and sell stop the rest at $41.98 thereby guaranteeing you a profit and allowing the rest of your position to run as far as it can.

I recommended Sears Holding Corp. (NSDQ: SHLD) at $78.55.  The stock bounced higher a few points and then rolled over.  If you are still long get out immediately and take the loss. This stock could even be considered for a short now.

Priceline.com (NSDQ: PCLN) closed on June 11th at $183.91.  The next week Goldman Sachs upgraded the stock and it jumped as high as $12.83 intra-day and finished up over $10.  The close today was at $189.25.  Sell half your position and take these points off the table.  Sell stop yourself below $183 in case of a market drop which will bring the stock lower. Remember, when the tide goes out all ships go down.

Of all the other stocks I recommended F5 Networks (NSDQ: FFIV) is up 6.10%.  Do not let this stock drop more than another point before you start taking profits – if not sell the position outright.  Lulumon Athletica (NSDQ: LULU) is up 4.09% and is starting to look weak.  Sell half (or all if you like) immediately and sell stop the rest at $42.39.  Netflix (NSDQ: NFLX) took a big hit today and is now down 1.41% on the trade.  If you got in and made some money and took a profit before today's drop, good for you. The stock is still in an uptrend and one of the strongest in the market but the P/E is a bit high. This is one of Cramer's six best stocks and for a reason. This stock has been strong a long time and may just be pulling back to its uptrend line.

Akamai and Laboratory Corp. have both outperformed the market but the market is getting weak.
I am an active player and when a market looks like the mood is bullish I buy.  When that mood changes I sell – and I sell short.

Best Buy (NYSE: BBY) is looking very weak here and a good short as is The Gap (NYSE: GPS).  Boston Properties Inc. (NYSE: BXP) is looking prime for a drop and Avalon Bay (NYSE: AVB) looks weak too.  On market weakness these would be good stocks to help hedge your portfolio by getting short.

Sempra Energy (NYSE: SRE) and Public Services Enterprise Group (NYSE: PEG) look weak and ready to drop. 

BE CAREFUL HERE.  This could be the end of an all too short run off the bottom.  Do not be afraid to go to cash.

Monday, June 21, 2010