The stock market has put together a very strong two-day bounce. I am concerned it's just window dressing but whatever it is the short-term trend is now up. Technology stocks are getting most of the love these days. You could pretty much throw a dart at a board of NASDAQ-100 components and come up with something that looks poised to rally, although there are plenty you probably don't want to chase after.
In addition to tonight's new candidate here are a few stocks on my radar screen:
EL - has rallied to resistance and a breakout to new highs could be an entry point.
DVA - is on the verge of breaking out past resistance near $86.00.
ILMN - is about to test its all-time highs set last month near $76.80.
IBM - the rally has been impressive and IBM is back above its 50-dma. Personally I'd rather look for a dip near $168 before considering new positions.
CAT - is looking a little short-term extended here but a breakout past resistance near $105.00 would be very bullish.
MCD - has powered past resistance near $83.00 and rallied to new highs. A dip back toward $83 might be an entry point.
NSC - shares are still stuck in a sideways trading range but the long-term trend is still up and NSC looks like it's coiling for a breakout higher.
NEW DIRECTIONAL CALL PLAYS
Cerner Corp. - CERN - close: 60.40 change: +1.42
Stop Loss: 57.45
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 6 weeks
New Positions: Yes, see below
Why We Like It:
CERN looks like a strong bullish candidate. The stock never broke its long-term up trend and after three weeks of consolidating sideways it is now pushing through resistance near the $60.00 level. CERN also has clear support near $57.50. Plus, short-term technical indicators are turning bullish again.
I don't necessarily trust the market rally this week. It smells like end of quarter window dressing. Plus, the market could easily reverse if the critical parliament vote in Greece doesn't pass. Of course there is always the chance that investors decide to "sell the news" even if the Greek vote does pass.
Therefore we want to keep our bullish positions in CERN small to limit our risk.
I am suggesting small bullish positions now with a stop at $57.40. There is some resistance in the $62.50 area but I'm setting our target at $64.75. We do not want to hold over the late July earnings report. Keep in mind that July options expire in less than three weeks.
- Suggested (small) Positions -
buy the July $60 call (CERN1116G60) current ask $1.55
- or -
buy the Aug. $62.50 call (CERN1120H62.5) current ask $1.55
Entry on June 29 at $ xx.xx
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume = 624 thousand
Listed on June 28, 2011