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Wednesday: Editor's Watch List

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Play Editor's Note:

It's my personal belief that today's action in the market was purely short covering as investors reacted to the news about more Chinese stimulus. Stocks were already oversold and just needed a catalyst for an oversold bounce. Now the bounce might last a few days or it could immediately roll over. However, I suspect that stocks could merely churn sideways on Thursday as investors wait on the latest jobs report due out Friday morning.

I'm not adding new plays to the letter tonight but will list a few stocks worth watching.

CMI $21.94 +10.8%, You could argue that CMI has produced a bullish double bottom but that's a common pattern these days. What is impressive is that today's rally broke through the 10-dma and shares are close to breaking out over resistance near $22.00. There's plenty more overhead resistance to push through but CMI is showing some relative strength.

HANS $35.17 +3.6%, HANS has been in a mediocre up trend the last few months but that's a big improvement over what's happening in the S&P 500. Shares just bounced from their January lows and now HANS is testing resistance at the top of its trading range. This might be worth another look on a bullish breakout above $36.00.

LANC $40.41 +4.0%, I happened to notice that the stock is building a very clear bull-flag pattern. A move over $41.00 or $41.50 should be a bullish breakout from this consolidation pattern. LANC has a big flag-pole on this pattern, which would suggest a significant second leg higher.

RIO $13.78 +12.3%, RIO is one of the commodity stocks that got a big boost from the China news today. This Brazilian miner might have found a bottom. Shares tested the $12.00 level twice and today's rally is a bullish breakout over its three-week trendline of lower highs in addition to a breakout above its 50-dma. Personally I'd probably wait for a dip back toward $13.00 before considering bullish positions.

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