February 11, 2008
Stocks featured in Monday’s RealMoney column include: CSCO, NE, MDT, FEIC, TMA and OMG
CSCO remains in a downtrend. What’s interesting is that the last two extreme downward gaps were bought and managed to close higher on the day. But so far, there has been no follow through. To me, that’s indicative of a real battle between the bulls that are buying on weakness and the bears who are selling into any strength. Until that dynamic changes, I’d still be a seller on tags of the trendline.
NE broke down from a multi-month uptrend in January, but the latest low is higher than the January low, and is being confirmed by an uptrending money flow index. Still, I’d only be comfortable buying the stock if there was some follow through above $46. And even then, you’ve got to understand that there will be plenty of resistance from $46 through $58 as the “I just want my money back” sellers close their positions.
MDT continues to absorb tons of supply at $51. Once the bulls can get through that overhang, there is a gap to fill. Still, the January low should be a line in the sand drawn by the bulls. If you’re long, try keeping a stop below that level. And if you’re looking to buy — consider your upside limited to $4 until (and unless) the buying pressure pushes MDT above $51.
FEIC has been in the House of Pain for the past few months, finally starting to build a base at around $21, which is where I’d consider support to be. But now that the downtrending resistance line has been broken, we’ve got to start looking for a break of the 50-day moving average. If the stock moves above that, I’d say it’s a buy.
TMA has taken the bulls on a wild ride. From a low of $7.50 to a high of $14, doesn’t it seem like the bulls need a rest? I’d be taking profits now, and wouldn’t be back in the stock until it tests $12…or even $11.
OMG is working on re-tracing more of the November-January run from $45 to $65. As long as we keep seeing lower highs and lower lows, I’d stay away from OMG.
Be careful out there.
Real Money