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Point & Go Figure: OSX, GS, SWY


Are you suggesting I take the Safeway home?


Market Overview:

The short-term conditions remain positive but are still at high-risk levels. The pattern of lower lows and lower highs persists for both the NYSE and Nasdaq Composite Percent Above 50-day Moving Average Indicators.

The High-Low Indices for the NYSE and Nasdaq Composite are positive (in columns of Xs), but there again the negative divergence - lower highs - persists.

The longer-term bullish percent Indices for the NYSE and Nasdaq Composite are both still in Xs, but the larger pattern of lower highs there also remains intact. The more narrow S&P 500 and Nasdaq-100 Bullish Percents are both still negative, and not even close to a reversal higher. In fact, the S&P 500 Bullish Percent was actually lower yesterday.

The picture of high risk these indicators paint continues to frustrate as the market indices make new highs in some cases. But a look back at 1999 shows a similar frustration period as broad indices made new highs on divergent indicators throughout the year before a downside resolution occurred.

Charts of Interest:
Oil Service Sector Index (OSX)
(Chart courtesy
The OSX broke a spread triple top at 206, and has now settled back to restest that level (note the yellow line). While a move to 204 would be a PnF "sell" signal - a double bottom break - the "volatility" of this chart shows that support/resistance areas are more important than simple buy/sell signals, so I consider the OSX "ok" as long as it remains above 202. Below that would suggest there is something more complex going on.

Goldman Sachs (GS)
(Chart courtesy
GS continues to make new highs and the revised PnF price objective is now 169. For my taste this is not a stock I want to be long. However, because it failed to react to DeMark 13s (both TD-Sequential and TD-Combo sell signals), it is also a stock I do not want to be short. As Cool Hand Luke once said, sometimes nothing is a pretty cool hand.

Safeway (SWY)
(Chart courtesy
My man Jeff Macke on Friday's "Fast Money," a new CNBC segment, mentioned Safeway as a stock he likes - an up-and-comer versus WalMart (WMT). His co-panelists shouted down this little stock while simultaneously appearing to injure their arms while patting each other on the back for choosing momentum stocks in the oil and oil service sector.

I like Safeway. The stock had been basing for three years down here before quietly breaking through long-term multi-year downtrend resistance last fall. It recently reversed back up to form a higher bottom and the risk/reward, an upside target (.5x3 chart) of 32 versus a breakdown below the 50-day moving average below 24.50, looks positive to me.

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No positions in stocks mentioned.

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