Short-Term Stock Market Action Sloppy

The short-term action is sloppy as the year gets underway. Sloppy action happens when the tape indicates fatigue. The market is not poised to go topside and break free. It is in the process of consolidating the gains made over the last few months. There are always opportunities in individual instruments that persist in moving up or down. In the worst bear market, there are still rising tides. In the best bull market, there are stocks and sectors that lag and persist in a declining trading pattern. The ability to recognize intermediate- and long-term stages of trade within individual issues is the key to making money. The ability to execute a pick and carry it to a satisfying gain is important. It is not merely picking. It is carrying the pick to fruition. That amounts to nothing more then managing risk. I will examine three stocks that I am currently involved in long.

Level 3 Communications ( LVLT) 5.93

LVLT will pop on the open. It broke out in heavy trade on Friday and is up 5.89% this year. It is up 115% in the last 52 weeks of trading. It is clearly in a long term advance. The advance may get a lift today as Jim Cramer in his show on Friday night touted it as his number one speculative pick for the year. I am fortunate to have a big position in the stock and am sitting on a decent gain. LVLT will gap up on the open this morning as followers of Cramer plunge in bidding up the stock. If the action in the pre-market holds and it manages to open above 6.10 and close above that price point, then the top of its base is taken out and it is free to test the high made exactly three years ago at 7.40. If LVLT trades up in greater volume then Friday and closes above 6.10, then the current advance moves into another gear to conquer higher peaks. Place the trading stop under the 50-day moving average at 5.49.

Abbott Labs (ABT) 49.90

ABT is in a solid advance right now. It ought to be bought either coming into the 48-49 zones or going topside 50.25 on a close. It pays to stick a toe in right now enabling it to be watched closely and build the position over the course of the quarter. I have a decent position in ABT right now and intend to ride the current positive wave to higher price points. It currently trades above all key inflection points. It is short-, intermediate-, and long-term bullish . A tight stop at 46.99 is prudent. The 50-day moving average is 47.68.

Emdeon Corporation (HLTH) 12.60

HLTH is trading at the top of its base and to extend its current advance must rise and close above 12.80.If that happens and it could happen today then that is the signal to buy shares. The trading stop ought to be placed at 11.99. The risk is low with a tight stop in place. The reward far better if HLTH has the ability to cross and close above 12.80.

A new week in a new year and the fourth trading day. Markets are up in Europe. Futures are trading up so far. The open will be firm. The bounce this morning will be modest. The question about the course of the day arises. In this choppy, fatigued market, anything may happen. Short-term support on all three popular averages has not been violated in spite of the selling pressure that took them down on Friday. The selling has been controlled. Until that reality is altered, it pays to be net long.

Jack Rothstein is an SEC-registered investment advisor who has been analyzing, buying and selling stocks for more than 19 years. For a free 30-day trial subscription to the Wealthcast Stock Market Letter & Snapshot Service, click here.

It should not be assumed that the methods, techniques, or indicators presented on these websites will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these websites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, Tiger Shark Publishing LLC, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.