Stock Charts For This Week: Trend Remains Up

During the past week, the market remained in a trading range, with a failed breakdown on Thursday, followed by a failed breakout on Friday. Quantifiable Edges posted a study on failed breakdowns, with statistics indicating the next move is likely higher. I am tending toward that view myself, and am not overly concerned about Friday’s breakout failure. For now, the trend remains up, with a greater number of charts appearing attractive for long side trades.

While I am cautiously bullish, the signals are somewhat mixed overall. Bullish sentiment is extremely high, and short interest has declined significantly. Both tend to be contrary indicators. We continue to hear news that insiders are selling at an increasingly rapid pace. The Chinese and Indian markets have turned bearish, from a technical analysis perspective. And September is historically a weak month for the stock market.

I will also be watching the dollar closely. Lots of volume has been coming into the Bullish Dollar ETF (UUP), which shows signs of a bottom. Given that the stock market has been trading inversely to the dollar, UUP gives us one more reason for caution.

Below are a few charts for current long positions. By the way, a hat tip to momentum-trader.com. I like sites that post a lot of chart setups, and some of the charts below were found at the momentum trader site. Although this might look like a large number of long positions, I am pretty well hedged on the short side, with short positions and/or long-dated puts in the following names: FXI, ISLE, BWA, EAT, BBY, PENN, VPRT, DTG, HTZ, RKH, and XLY.

- Silicon Laboratories (SLAB)

- New Market (NEU)

- KKR Financial Holdings (KFN)

- JDS Uniphase (JDSU)

- CIENA (CIEN)

-STEC (STEC)

-Textron (TXT)

- Perfect World (PWRD)

- Lindsay (LNN)

- CardioNet (BEAT)

- Genoptix (GXDX)

Here are a few of those short positions/puts:

- iShares FTSE/Xinhua China 25 Index ETF (FXI)

It is worth looking at the Shanghai Composite Index, just to get an idea about some recent action in China. Bear in mind that FXI represents the largest companies trading on the Hong Kong exchange, so comparisons should be made with the differences in mind. However, the Shanghai market is clearly bearish, having shed over 20% of it value before the recent retracement. FXI appears to be in better shape, but is showing signs of a top. It is difficult to imagine FXI regaining bullish momentum if the Shanghai market continues its downward trajectory.

- IFN (IFN): The India ETF is trading below its 50 day moving average, with lower highs and lower lows.

- Isle Of Capri Casinos (ISLE) sold off on high volume after earnings last week.

- Brinker (EAT): Restaurant stocks look weak.

Lastly, TraderFeed has an excellent post up concerning the massive trading volume in a small number of financial stocks during the past month. Just a bit more evidence of market manipulation by powerful financial forces…

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