US Stock Market: Long Picks For Monday

As I mentioned in my Wednesday, I am carrying a lot of short exposure here. When SPY (SPY) broke below its ascending wedge, it appeared that the market was signaling a top. The rest of the week saw a mixture of indecision and more bullish sentiment, as traders attempted to lift price above the high of the week. Looking at SPY, we can see that price remains below the wedge trendline, as well as the weekly high, although we were very close to a breakout on Friday.

Going into Monday, the question is whether the bulls can generate another leg higher. If SPY can get above 86.50, we will likely get another short squeeze, and buyers will be stepping up. Considering this, I am tightening up stops on a number of short positions, and preparing to enter some long trades on signs of a breakout. Here are some charts I have on watch for Monday:

- K-Tron International (KTII) had some huge volume last week. I’ll be looking for a move over Friday’s high.

- Sohu.com (SOHU) broke above resistance with heavy volume on Friday. Earnings on May 4.

- Domtar (UFS) also broke out with volume on Friday. Earnings on May 1.

- Tesco (TESO) had some volume come in last week. I’m looking for a move over 10.20.

- Opnext (OPXT) had huge volume last week, but the chart is a bit sloppy.

- iShares Dow Jones Transportation Average (IYT): Volume on the transports ETF is impressive, and it remains in a solid uptrend. The main caveat is that we didn’t see much price movement of Friday with all of the volume. I’m actually not sure what to make of this chart, but I will be watching it closely on Monday, as it will provide some valuable clues to market direction, along with the financial and real estate ETFs.

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