The markets continue to get hammered today with the DOW lower by 1.65%, Nasdaq down 1.40% and the S&P 500 dropping 1.50%. This is all on the back of economic data released over the last three days that has stunned Wall Street. Consumer Confidence shocked, New Home Sales jolted and today, Jobless Claims slammed. Double dip? Quite possible!
While the markets are dropping for the second day in the last three, solid risk to reward swing trades are emerging at key technical levels. I will discuss my Top 3.
Exxon Mobil Corporation (NYSE:XOM) reported fantastic earnings February 1st, 2010. The stock jumped higher in dramatic fashion. Technically, the support from the low it made prior to earnings is still intact and likely to be a bounce area. That level is $63.50 to $64.00. If that level fails to hold, the stock may be destined to fall to $61.75 to $62.00. While a bounce is likely off the $63.50 to $64.00 level, it is highly likely that in the next month or two, XOM tags the $61.75 – $62.00. This is the ideal level for a longer term bounce in my humble opinion.
Verizon Communications Inc. (NYSE:VZ) has been crushed since the start of the year. On the first trading day of 2010, it made a high of $33.45. Since then, it has been straight down. The pattern right now on the daily chart screens in-spirit of bull flag. In addition, if we see more selling on VZ to the low on February 5th, 2010 at $28.31, it would be a perfect double bottom. Both signal a possible up move coming in the not to distant future. Not only is the chart attractive on VZ, but the dividend yield of 6.60% is not shabby. Seeing a dividend yield like this makes this technical chart have a nice fundamental cushion. Look for VZ to be a decent short to mid term swing in my opinion. In addition, AT&T Inc. (NYSE:T) is also on my radar if it gets to $23.50 area
Last but not least I wanted to feature a small cap. This small cap on the chart is extremely attractive because of the dramatic rise and fall it has seen in the last month. Since late January, Conolog Corporation (NASDAQ:CNLG) made a meteoric jump from the $1.20 level to a high on February 1st, 2010 of $4.72. Since that top, it has slowly fallen all the way back to a low today of $1.87. Technically speaking, it has filled the major gaps and is now sitting just on top of the 50 moving average on the daily chart. The run was due to recent announcements of orders. This is a micro cap play with an insane amount of risk but the reward at this level is looking somewhat attractive and is on my radar.
*As of this article, I am neither long or short any of these positions.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
