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发帖数: 2767 | 1 WEDNESDAY, MARCH 28, 2012, By MICHAEL KAHN
As the first quarter draws to a close, the stock market has extended its
impressive rally off the October lows with a solid 8% rise for 2012, at
least until Wednesday's selloff. Some stocks have scored extraordinary gains
of 100% and more, and for investors lucky enough to have these names, the
question now is what to do with them.
Here's how to tell.
As is often the case, the ranks of the biggest movers are filled with small
stocks with low market capitalizations. These also come with high risk and
high volatility. If we restrict our universe to bigger stocks with wider
investor interest, a few interesting names appear.
Sears Holdings (ticker: SHLD), parent of the Sears and Kmart chains, has had
one of the strongest performances so far in 2012 as it rocketed back from
the depths set early in January. In a tailspin since 2007, the stock plunged
from 83.25 last October to an eight-year low at 28.89 on Jan. 5 (see Chart
1). The 65% loss in just over two months was sparked by fears that the
company was in an irreversible decline.
Chart 1
Sears Holdings
[B-GT1-0328]
But takeover rumors surfaced and the stock just as quickly regained what it
lost. It rallied to 85.90 earlier this month before easing back to its
current trading near 70.30. The question is whether current weakness is a
normal correction after an exceptional bull run or a shift in fortune.
Technically, the rising trendline from the January low was broken to the
downside in Wednesday's trading. Momentum readings have all turned negative,
too. Although low volume statistics do not suggest investors are fleeing en
masse, there is no significant chart support until the 58 level.
That would represent a 50% retracement of the 2012 rally and a place where
the bears would have to actively drive the stock lower to keep the decline
going. Until that time, it seems Sears can fall under its own weight based
on the fears that all of the moves the company made to shore up its finances
are not working.
Movie and entertainment purveyor Netflix (NFLX) is another big name with a
big gain this year. From the first day of January, it is up roughly 75% to
Wednesday's trading near 118.70. By way of comparison, it was trading above
300 in July of last year before tumbling to 64 by November.
This stock, however, has been trading at depressed levels, albeit in a wide
range, for many months. In technical analysis, this sideways trading, even
with high volatility, is part of the healing process. It may be building a
base from which the stock can attempt to launch its next bullish trend.
For now, the stock is between a price ceiling at roughly 133 and a floor at
roughly 104 (see Chart 2). It is also above a now-rising 50-day moving
average, which suggests the intermediate-term trend is to the upside, too.
Therefore, there is enough on the charts for investors with a higher
tolerance for risk to like.
Chart 2
Netflix
[B-GT2-0328]
Finally, the biggest story of the year is arguably Bank of America (BAC). I
first wrote about this comeback in January, looking for a target price of 9.
50 (see Getting Technical, "Can Last Year's Goats Become This Year's Heroes?
", Jan. 23). The stock poked it head above 10 this month before easing back
to Wednesday's midday price of 9.70 (see Chart 3).
Chart 3
Bank of America
[B-GT3-0328]
Technicals such as moving averages, volume and momentum all remain
supportive. And as I wrote last week, the banking sector as a whole still
has some room to go before it runs into its own price ceiling (see Getting
Technical, "Commercial-Bank Stocks Still Have Room to Run," March 19).
Therefore, until Bank of America proves otherwise, it remains in good shape
for the time being.
There are plenty of other widely followed stocks with big gains this year.
Home builders, such as Hovnanian Enterprises (HOV) also named in my Jan. 23
story, have run into problems and lost their upside power (see Getting
Technical, "Rallying Home Builders Show Wear and Tear," March 26).
Others, such as Apple (AAPL), Chipotle Mexican Grill (CMG) and Starbucks (
SBUX) remain technically overbought yet seemingly unstoppable.
The decision to hold or fold this year's winners remains a case-by-case
decision. As long as their charts remain solid, investors can keep on riding
them. | T*********s
发帖数: 17839 | |
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