Thursday, September 27, 2012

Today's Overview
Index futures ticked higher overnight but lost ground in Thursday's premarket, in reaction to the weakest durable goods data since 2009. Traders shook off that news into the U.S. open and then got hit by a surprisingly weak pending home sales report. Positive seasonality overcame negative news flow, yielding steady action on the S&P 500 and a recovery on the Nasdaq 100, thanks to a sizable Apple (AAPL) bounce. Spain announced budget austerity measures around 11:30 a.m. EDT, triggering euro whipsaws, followed by a midday rally that lifted U.S. indices to intraday highs. The uptick pushed the S&P 500 above overnight resistance at 1435 and into 1445, where the 200-bar EMA on the 60-minute all-sessions chart ended the upside. The broad market then wobbled sideways in quiet action for the rest of the day Banks opened the session strongly and showed leadership during the rally, with KBW Banking Index (KBX) bouncing back to 50. Newsletter pick Wells Fargo (WFC) jumped off support, despite weak home sales data and shows a broad rising channel, with resistance near $36.50. However, short-term resistance remains in place and I do not expect a straight up move back to the highs. Apple (AAPL) bounced strongly, rising more than 16 points and filling Wednesday's gap. Despite the recovery, the stock has lost momentum since its visit to $700 and choppy price action is likely between now and company earnings on October 23. The same holds true with big tech in the Nasdaq 100, which shows a less constructive pattern than the S&P 500 after the three-day decline. Chip stocks also had strong sessions, following through on Wednesday's reversal. However, the PHLX Semiconductor Index (SOX) is now firmly planted below new resistance at the 50- and 200-day EMAs, as well as a broken double top at 395. This suggests the current recovery will fail to trade over 400. Notably, Intel (INTC) ticked higher today but failed to remount broken support levels. (Continued on the next page.)

PLEASE SEE IMPORTANT LEGAL DISCLAIMER ON LAST PAGE

Thursday, September 27, 2012

The last day of the quarter tends to offer few trading opportunities because funds do not want to rock the boat and mess around with their quarterly results. It could be different this time around if European news flow intervenes. Given the market's strong buy reaction to today's weak data, I doubt that anything on this side of the Atlantic will interfere with the bounce that began this afternoon. I bought Wells Fargo (WFC) in Wednesday's premarket and flipped it into the rally. I bought Wal-Mart (WMT) at a trend line just a minute or two before the S&P 500 took off, so I added to it for mark-up exposure. I hope to hold it into the first trading day of the new quarter, on Monday.

2
2012 TheStreet, Inc. All rights reserved.

Thursday, September 27, 2012

Random Notes: Bullet Points on the Market

The major indices are not set up to challenge the rally highs, despite today's reversal. Watch S&P 500 futures at 1450 or around 1458 on the cash index. The broad market will move higher more easily if that level gets remounted. Transports underperformed but closed well in the green. Gold and silver bounced back to their rally highs. I mentioned 1445 last evening as a possible mark-up high. The S&P 500 missed it by $0.50. The Russell 2000 now shows resistance at 850. Crude oil bounced but is now trading in a descending channel. Retail underperformed. salesforce.com (CRM) remounted broken support.

3
2012 TheStreet, Inc. All rights reserved.

Thursday, September 27, 2012

Daily Spotlight
General Motors (GM) is still struggling to enter an uptrend, nearly two years after coming out of bankruptcy. This follows a 20-year bear market into its 2008 collapse. The stock came public near $34 in November and peaked near $40 a few months later. The subsequent decline shows multiple waves that found support near $18 in October 2011. The price has been grinding sideways in a big rectangle for the last year.

GM is currently trading near the midpoint of the trading range, with weak volume that points to caution and apathy, in reaction to the deteriorating economy. The company also lost the twoyear advantage it had over Toyota (TM), which got hit with a double whammy of product recalls and a natural disaster. That benefit might reemerge if the China-Japan dispute shuts down that lucrative trading channel.
(Continued on the next page)

4
2012 TheStreet, Inc. All rights reserved.

Thursday, September 27, 2012

Tempur-Pedic (TPX) topped out at an all-time high near $87 in April, following a threeyear rally. It accelerated to the downside in June, in an ugly collapse that is still in progress, despite today's 14% bounce. That rally took place in reaction to a company acquisition, but nothing on the daily pattern shows a trend change. As a result, the 2012 low near $20.50 remains in play and could still be broken.

Today's action looks far bullish than the high percentage gain, when evaluating the bounce into the 50-day EMA resistance and subsequent graveyard doji. The huge gap between $27 and $42 is the dominant feature in this pattern, with the price failing to close the hole when it topped out near $36 earlier this month. There is no guarantee that the stock will fill the gap completely, prior to rolling over and testing the low. * * * (Spotlight presents updated index analysis, quick takes on reader favorites and fresh views of active picks. The section belongs to our subscribers, so let Alan know what charts you would like to see by sending him your requests at trader@hardrightedge.com. Please note that Alan cant answer all of your requests due to time and space restrictions. Spotlight stocks are not recommendations to buy or sell, and will not be placed on the Watch List.)
(See Watch List on the next page)

5
2012 TheStreet, Inc. All rights reserved.

Thursday, September 27, 2012

[Up .

Watch List
LinkedIn (LNKD) filled Wednesday's gap. (long - 9/24/12) Geo Group (GEO) bounced to the midpoint of the three-week range. (long - 9/20/12) F5 Networks (FFIV) tested the two-day high and pulled back. (long - 9/18/12) Bloomin' Brands (BLMN) bounced strongly and is testing the rally high. (long - 9/18/12) Mattel (MAT) bounced along the 20-day SMA. (long - 9/13/12) HollyFrontier Corp. (HFC) bounced at breakout support. (long - 9/11/12) Westlake Chemicals (WLK) bounced at breakout support. (long - 9/10/12) Chevron (CVX) bounced above range support and may have posted a higher low. (long - 9/7/12) Mueller Water Products (MWA) is testing the rally high. (long - 9/6/12) Wells Fargo (WFC) bounced at breakout support. (long - 9/6/12) FleetCor Technologies (FLT) tried to establish support at the 20-day SMA. (long - 9/4/12) Fastenal (FAST) tested the two-day high and pulled back. (long - 8/28/12) Infinity Pharmaceuticals (INFI) is testing range resistance near $23.50. (long - 8/24/12) Medivation (MDVN) rallied to a new high. (long - 8/20/12) Ixia (XXIA) completed a cup and handle breakout pattern. (long 8/7/12) Xenoport (XNPT) is testing the rally high. (long - 8/2/12) CoreLogic (CLGX) bounced in a constructive session. (long - 7/30/12) Watson Pharmaceuticals (WPI) bounced at support and may have posted a higher low. (long -7/27/12) Alexion Pharmaceuticals (ALXN) posted an inside day. (long - 7/9/12)

6
2012 TheStreet, Inc. All rights reserved.

Thursday, September 27, 2012

Watch List Ticker

BLMN will wave a red flag if it sells off here because it might complete and head-andshoulders top XXIA could take a very strong move off this platform but it might not evolve for a few sessions WPI looks good right here.

7
2012 TheStreet, Inc. All rights reserved.

Thursday, September 27, 2012

Sarepta Therapeutics (SRPT)

Todays Close: $14.71, up $0.40

Sarepta Therapeutics (SRPT) is a high-risk small-cap biotech play with several drug applications in progress. The company got fast-track status for one group last week and bounced to the August high, which marks resistance going back to 2007. A breakout above $16.50 to $17 could yield an uptrend into the mid-$20s. In addition, the stock appears to be carving out the last stages of a cup-and-handle breakout pattern. Keep in mind this issue is vulnerable to news shocks that can trigger big losses. There are two options, depending on the time frame. SRPT been consolidating on the 20-day SMA for the last four sessions. This has set up a 60-minute basing pattern, with resistance at $14.80 to $15. Traders can buy that breakout or wait for the larger-scale setup. Longer-term positions carry more risk because the range could hold and yield a downtrend.

(See second chart on the next page.)

8
2012 TheStreet, Inc. All rights reserved.

Thursday, September 27, 2012

Sarepta Therapeutics (SRPT)

9
2012 TheStreet, Inc. All rights reserved.

Thursday, September 27, 2012

Alan welcomes your questions about The Daily Swing Trade and his swing trading strategy and techniques. Please email Alan with your questions at trader@hardrightedge.com. However, please remember that The Daily Swing Trade is not intended to provide personalized investment advice. Do not email Alan seeking personalized investment advice, which he cannot provide. Question: Why is the failure rate for new traders so high? Alan Farley: If you want to be a profitable trader, be patient because the market will take years to understand and master. Unfortunately, new traders are looking for something that does not exist: easy money. This dooms the majority from the beginning, but a few will survive and prosper. Others will fail because they are searching for a perfect market formula that works in all situations and never hurts their egos. That does not exist either. So, this leaves a small percentage of traders who really want to learn how to make money. The most important and least understood lesson for the new trader to learn is the duality or grayness of everything that passes for market knowledge. That annoying subjectivity makes brains melt but it also forces a razorlike concentration on risk management and discipline, which are the real skills needed to prosper.

10
2012 TheStreet, Inc. All rights reserved.

Thursday, September 27, 2012

Guidelines and Frequently Asked Questions

For guidelines about the best way to use The Daily Swing Trade and for answers to the questions readers ask most often, a guide, "Your Questions Answered About Swing Trading," has been created. For the guide, click here: http://www.thestreet.com/tsc/dst_rep_questions.pdf Farleys latest book, The Master Swing Trader Toolkit: The Market Survival Guide, was released in April 2010.

11
2012 TheStreet, Inc. All rights reserved.

Thursday, September 27, 2012

Contact Info
Customer Service: Please email swingtrade@thestreet.com, or call 1-866-321-TSCM (8726) Mon. Fri. 8 a.m. to 6 p.m. ET; or outside the U.S. and in Canada, call 1-212-321-5200 Reader Feedback and Questions: Please send an email directly to Alan at trader@hardrightedge.com. Again, please direct all account-related inquiries to customer service.

Legal Information
Please see the Terms of Use here.

12
2012 TheStreet, Inc. All rights reserved.