December 22nd, 2009
I happened to catch Carter Worth of Oppenheimer & Co. on Fast Money tonight and I was amazed to hear him agree with me or, as he might see it if we ever had a chance to meet, that I agreed with him. It’s fascinating how two experienced technical analysts can look at charts and arrive at identical or, at least, similar conclusions.
Carter anticipates a short, shallow correction followed by a continuation of the bull market. What was even more striking to me, however, were his specific stock recommendations: IBM and AMGN. Not only did he see some upside opportunities in those charts but, dare I say, he liked them from a fundamental perspective also. For example, he pointed out that while IBM is at the same price it was at its peak 10 years ago, today’s P/E is around 11 as compared to the over 40 P/E back in 1999 (unfortunately, I failed to note the actual numbers). Amgen presented a similar technical and fundamental picture.
Carter may have been constrained by the broadcast schedule but, without those constraints, I had seen the same thing for some time and would even go father and say that the one area of opportunities in the next leg of the bull market (after the correction we both see coming in the coming New Year) is among nearly any of the large-cap Nasdaq stocks.
Scrolling through long-term charts (10 years or more of weekly and 9-day price/volume bar charts) of the Nasdaq 100 stocks and underscores one or more of the following common bullish characteristics:
- 54 of 100 are have “bull crosses” alignment in their moving averages (price>50>100>200>300-DMA)
- 74 have “golden crosses” in their moving averages (100>200-DMA)
- 41 of 100 have 300-DMA that are upward sloping
- about to break into new all-time high territory
- successfully testing recent past resistance levels as support levels
- breaking above extremely long-term downward sloping resistance trendlines
- stocks in the group have out-paced the S&P 500 Index in that: 29 exceed their levels when the S&P peaked in October, 2007, 64 have better performance than the S&P since the S&P peaked and 54 have performed better than the S&P since the March 9 bottom
Contrary to the views of some readers, I am not a perma-bear. Actually, I usually remain optimistic much longer than I should and actually have a difficult time of restraining myself from buying stocks. But there are times when caution is warranted and the market’s recently being locked in a 2 percentage point channel is one of them.
But I would be remiss in not mentioning that the Nasdaq Composite has recently broken above a similar horizontal channel indicating that some NASDAQ 100 stocks have already begun climbing.
Some components of the Nasdaq 100 look awfully compelling, like ORCL:
It’s exciting, about as exciting as it felt back in March with all those clear reversal bottom patterns (remember, “shooting fish in a barrel”?). So far, however, it’s only a prospect, a possibility rather than a strong momentum ride on which to piggyback. After the correction Carter and I are expecting, however, this will be the place I begin mining for new opportunities.