Watchlist Saturday

Here is my watchlist for the upcoming week. I have included a market posture as well. I indicate stocks that may be starting to go bullish (or bearish) but are not quite ready in italics. I indicate stocks that are bullish (or bearish) but may be too extended short term in parenthesis. I indicate stocks that are bullish (or bearish) and might still be playable short term in a regular font. I indicate stocks that are bullish (or bearish) that appear to be closest to a buy signal, or are giving a buy signal, in bold font. The bolded stocks are the most compelling to me because they may be a trade entry soon. I have abbreviated Intermediate Term (IT), and Short Term (ST).

Dow: IT Bearish and ST Neutral. The Dow dumped down through a major support level this past week, and closed at new lows for the year. There is short-term support in the region of 11,200 - 11,300, which the Dow tested yesterday. If we get a bounce back to 11,600 - 11,650 (11,750 is possible, but less likely), the Dow could still roll over and leg down to 11,000 even. Interestingly enough, 10,750 is the 50% retracement of the 5-year Bull Market, so I would expect that to be a critical area if we see some sort of selling climax in the next little while.

SPX: IT Bearish and ST Neutral. The SPX dumped down into a major support zone for the year between 1,256 - 1,274. If we get a bounce back to 1,300 (and maybe even as far as 1,310 - 1,320), the SPX could still roll over and test the 1,255 area. If the Dow has a climactic type of sell-off to 10,750, then the SPX could drop to the 1,220 - 1,240 area, and perhaps as low as 1,200.

Naz: IT Bearish and ST Neutral. The Naz dumped down into a support area of 2,290 - 2,310. If the Naz bounces back to the 2,350 area, it could still roll over and tag the next support zone down in the 2,260 area. The more I look at the long term charts, the more I wonder if the Naz is going to roll down to 2,150 - 2,200. It's amazing to me how desperately bullish Fund Managers were as they gobbled up Tech stocks for 3 months without regard for the macro-economic fundamentals or the Long-Term Head and Shoulders neckline from last year around the 2,540 area, (which you can see really well on a line chart). The high on the Naz before it rolled over was 2,551, surprise surprise.....

Here is my Weekly Watchlist. Make sure to check the option spreads before paper trading. Ideally, I want spreads of .10-.20 cents on options for stocks between 20-200 dollars.

BULLISH SECTORS/GROUPS AND STOCKS:

Short Index ETF's: SRS, (SKF, FXP, QID, TWM, SDS, DXD)
Copper: FCX, PCU
Chemicals/Agriculture: CF, TRA, MOS, CF, AGU, POT
Coal: WLT, ANR, FDG, MEE, ACI, CNX, (FCL)
Energy: ATW, HERO, HK, HP, PCX (probably won't make a higher high), DO, WLL, OXY, SWN, HES, MUR, (WFT, NBR, HP)
Steel: AKS, SCHN, CLF, STLD, X
Gold: (GG, ABX, AEM, NEM)
Note: V, BUCY, FWLT, ILMN, CELG, ACN, FLIR, WYE

BEARISH SECTORS/GROUPS AND STOCKS:

Index ETF's: (IWM, MDY, QQQQ, EEM, DIA, SPY, XLB, IYT, IYR)
Cyclicals: (MMM, UTX, BA)
Defense: (HON, GD, RTN)
Transportion: (UPS, FDX, CHRW)
Tech: (IBM, ERTS, RIMM, ADSK, TYC, TMO, WDC), ADBE, XLNX
Retail: NKE, (BBY, GME)
Manufacturing/Machinery: (ROK, PH, IR, CAT, ETN, EMR, TEX)
Food & Beverage/Personal Products: K, GIS, CL, KO, PG
Leisure: (HOT, LVS, WYNN)
REIT's: PLD
Financials: (TRV, ALL, MET, PRU, COF, AXP, PFG, ICE, NYX, MER, LM), NTRS, STT
Note: CL, IMCL, GILD (Head and Shoulders Top?), MHS, ETR, (BG)

Here is how I think things will go next week. First of all, keep in mind that there are only four trading days since the 4th of July is on Friday. On Monday before the open we get the Chicago PMI. Barring a catastrophic number, we will probably see the markets bounce from an oversold condition short term. The ISM on Tuesday is the second biggest economic report of the month, and again, barring a catastrophic number, look for the upswing to continue. If Factory Orders and the Oil Inventory Report on Wednesday meet expectations, then the swing might even continue into Wednesday, or at least not roll over hard. Thursday we get the Employment Report, which is the biggest economic report of the month. It's coming a day early, but we are still scheduled to get the report as usual. If the Employment Report even meets expectations (-50k on Nonfarm Payrolls and a drop to 5.4% from 5.5% on the Unemployment Rate), and the market has had an upswing for three days prior to the report, then I expect the bulls to lock and walk ahead of the 3-day weekend, which would probably be enough to roll the market back over.

Now, It the Chicago PMI stinks it up on Monday we will probably sell down a little. If the ISM stinks it up on Tuesday - especially in the employment component - then look for a possible climactic type of sell-off into Wednesday. Either way, it looks like the ISM on Tuesday (or possibly the Chicago PMI on Monday) and the Employment Report on Thursday - coming before a 3-day weekend - will act as bookend pivot points for the market next week. I wouldn't be surprised by either one of these scenarios: a bounce early in the week and an fade at the end of the week, or a climactic sell-off early in the week and a bounce on short-covering at the end of the week. I don't care which one it is, but I would give the bounce at the beginning of the week the greater odds, probably a 60% - 65% chance of happening. Look at the DXD or Short-Dow ETF and you get the idea. We are pretty overcooked short-term. It doesn't mean that we won't get some kind of climactic sell-off on catastrophic economic numbers Monday or Tuesday, but we are likely to swing up on the markets before we sell-off again.