Thursday, March 3, 2011

Active Screen - CANSLIM: Top 8 for March 3rd

There was another shuffle in the lineup of the top-8 stocks ranked by Market Cap. Gone was Southwestern Energy (SWN) and in came Vale S.A. (VALE). The current top 8 are: Apple (AAPL), Vale S.A. (VALE), Barrick Gold (ABX), Free McMoran (FCX), Baidu (BIDU), Research in Motion (RIMM), Cognizant Technlogy (CTSH), and Intuitive Surgical (ISRG). The Screener setup was as follows:

How have these stocks reacted to prior selling?

Apple (AAPL) came off its 50-day MA in reasonable form. Recovery volume was a little light in the 3-day sequence of gains. But it was good enough to create a bear trap (bullish). However, Tuesday's sell off was worrisome as it makes the push to maintain the sequence of higher highs and higher lows harder. Should the 50-day MA be tested before a break of $363 occurs then the favoured outcome is for a larger push down to the 200-day MA, currently at $293.

Zignals Chart Image

New boy, Vale S.A. (VALE) and its $170B Market Cap, has been trading around its 50-day MA, but is in a no-mans land between 50-day and 200-day MAs and is currently fighting to hold $34 support. Bears will look to a possible bearish head-and-shoulder pattern as marked by the blue neckline in the chart below. The stock has the lowest P/E of the eight at 10.38.

Zignals Chart Image

Next in line is Barrick Gold (ABX). The past week have seen a continuation of the gains worked off its 200-day MA. Trades just below the 2011 reaction high of $54 and is on course to make a challenge of $55.40.

Free McMoran (FCX) is a good example of troubles stocks have trading between 50-day and 200-day MAs. With the 50-day MA rolling down the intermediate term is firmly negative. There is support at $48 to defend and a 200-day MA at $44.58 to provide additional help.

Baidu (BIDU) dug in at $114 support but is shaping a small bearish pennant just above this price level. With the 50-day MA rising to meet falling prices there is an opportunity for a bear trap - where prices break lower from the pennant but quickly recover to move higher.

Zignals Chart Image

Research in Motion (RIMM) as been slowly edging higher without fuss. The 50-day MA sits at $62.77 and is the nearest support level to look too.

Cognizant Technology Solutions Corp (CTSH) is trading around its 50-day MA, but it's getting squeezed by the rising 50-day MA and $76 resistance. Which will break first?

Zignals Chart Image

Finally, Intuitive Surgical (ISRG) has continued its move into space created by the huge breakout gap (below $320 and above $296). The 50-day MA at $304.98 is a probable buy point for sideline money. The scale of the gap suggests the push below $320 won't last long. Will the broader market help or hinder bulls?

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