MY WATCH LIST

Not too many breakouts or breakdowns at all. Therefore, I chose to share a few stocks on my long and short watch list for tomorrow. These trades are mostly 1-3 day holds and are in no way long-term positions (in this market?!). Even though the market is consolidating, that doesn’t mean all stocks are in a neutral range. It just means that there’s about an equal number of stocks that are heading up and heading down. The key is to find the most reliable patterns because if a breakout of breakdown did occur, stocks “on the other side” mostly do not immediately move that way but continue in their prevailing direction for several days. This is especially true for short positions. This is why you still see a lot of breakdowns on up days…people still want to get out.

The day was volatile as usual and those who cannot stomach the volatility should be in cash until the market makes up its mind as to where the heck it wants to go from here. The whipsaw or the wild swings will only continue. The longer we consolidate, typically, the larger and more forceful the breakout or breakdown. Or, the market can just sit around in this range for a long time and do whatever it wants to do.

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TODAY'S BREAKOUTS & BREAKDOWNS

What a day! The VIX hits 40+, the Dow drops below 10,500 and then all of a sudden...a power rally! That was crazy! If you haven’t read my article on “How to Trade Breakouts and Breakdowns”, you should definitely do it.

Obviously, since the market is was up 4% today, I have a list probably over 100 breakouts, mostly concentrated in the financial sector. The medium and small-sized regional banks and financial services companies did the best. For example:

Frontier Financial (FTBK) up 50.3%! Today marks its official day out of mediocrity. Notice the 50-day MA curving up as well as the clean close well above the 200-day MA. There’s plenty of support for this bank in the future.

CoRUS Bankshares (CORS) spiked 45.5%! Unlike FTBK, CORS didn’t make it past the 200-day MA. The positive is that the stock didn’t drift lower after hitting resistance, but closed right at that level signaling a major willingness for buyers to break CORS above the 200-day MA. Note the ascending triangle as well as the 50-day MA curving up.

Pacific Capital (PCBC) reached its highest level this year…in only one day! Up 40.3% and clearly out of bear market territory, PCBC is free to head higher. Notice the upward wedge that formed as well as the most extended breakout above the 200-day MA of any chart profiled in this article.

Huntington (HBAN) should consolidate nicely right above the 200-day MA.

Newcastle (NCT) made an AMAZING comeback! Unbelievable. Provided that NCT doesn’t reverse to $6.50, it will go higher after some struggle at the 200-day MA.

Firstfed (FED) formed a downsloped flag, which set the stage for a breakout. FED will go higher.

Expect some consolidation for Marshall & IIsley (MI) and range-bound action for the next several weeks.

Banner (BANR) formed an ascending triangle and broke out up the upside, living up it the pattern’s description. The 200-day MA proved to be considerable resistance for BANR, having moved has high as $21, but falling below the MA to close at $17.51. If BANR breaks and closes above $19, it’s a buy.

A non-financial that broke out was Media General (MEG), up 111%! The company declined to comment on why the stock was up so much, but news suggests that MEG had the best August performance out of all of its competitors. Something is definitely in play here.

On a 400+ point day, you don’t expect too see many breakdowns. If a stock broke down on days like this, then that stock is totally in trouble.

Take, TETRA Technologies (TTI) as an example. TTI revised its guidance lower to $1.30 - $1.55 per share. That's always bad news.

A classic breakdown. Inevitable.

Dayton Superior (DSUP) posted weak ABI numbers and broke through a major multi-month support level. This means that ever buy at the $2 level since June either got crushed or sold in panic.

There was no way to see this one coming. Merck (MRK) discontinued a licensing agreement started in 2007 with SurModics (SRDX).

The Asian markets have been getting crushed more so than us in my opinion. AsiaInfo (ASIA), is no exception.

Apogee Enterprises (APOG) cut its 2009 outlook to $1.65 - $1.82 per share, down from $1.82 - $1.94 per share. Look at all the islands formed on the chart due to the gaps.