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1 Page 1 Page 3 Page 6 Page 7 Page 8 The Market: Choppiness Anticipated New Ideas: LQD, MSFT, BA Updates: JCP, AAPL, RVBD, XLI, JPM Today s Indicator Reader Feedback & Questions: SDS, XEC, SWY The Market At this point, I think the most bullish aspects of the market are that it refuses to go down and that the banks came soaring back from the brink. Some might say that the market got overbought and didn t crack. That is not very unusual. Keep in mind that the market got overbought only in the short term. The intermediate-term oscillator did not read as overbought. In fact, it was set to rally hard last week and instead all that happened was that the S&P 500 chopped around and the Nasdaq went down. It was the Dow Jones Industrial Average that did really well. Go figure. (Continued on the next page) PLEASE SEE IMPORTANT LEGAL DISCLAIMER ON LAST PAGE

2 Right now we have the battle of the head-and-shoulder patterns. There is the shorter-term one I noted here on Thursday evening, and there is the much larger one I discussed a few weeks ago. I have done my best to depict both on this one-year, weekly chart of the Nasdaq Composite. On the right side of the chart you see the potential bottom that I noted Thursday evening. (The little V s represent the two shoulders. The flat line represents the neck line.) The bigger pattern is represented by the high in March as the left shoulder, and the high in September as the head. You can see I have a red question mark circled for the potential right shoulder somewhere between 3025 (the recent highs) and The indicators are still quite mixed. Some indicators say the indices should go down, and some say there is still time left for more upside. With the Federal Open Market Committee meeting scheduled for this week and Washington still in focus, I can see another choppy to volatile week. For example, some upside early on could lead to some downside later in the week, or vice versa. What I do see is that downside this week would set up the market for a rally during the final week of the year. That should get stocks oversold enough, right around options expiration, to lift the averages -- followed by another high right near the beginning of the year. For now I think the upside is still somewhat limited. (For a look at the latest RealMoney column, click here.) 2

3 New Ideas I think we need to pay close attention to the chart of ishares:iboxx $IG Corp. (LQD), an exchange-traded fund for investment-grade corporate bonds. Up until the last several months, a peak in this ETF would come shortly before a peak in the stock market. A trough in this ETF would come shortly before a trough in the stock market. That began diverging earlier this year. However, that doesn t change the fact that this ETF has not managed to make a higher high since mid-october and is now threatening to break a six-month-long uptrend line. I suspect it will try for $121, which would be a break of the uptrend line but not a lower low. A lower low (less than $121) should have folks concerned, as it would confirm a double-top. Shares closed Friday at $ (Continued on the next page) 3

4 Have you noticed that lately a lot of old tech has come on strong? I m talking about the semiconductors, Nokia (NOK), Research In Motion (RIMM), Hewlett-Packard (HPQ and so on. I keep wondering why Microsoft (MSFT) hasn t joined in. The chart has a top that measures to between $25.50 and $26. If you pull your eyes over to the early part of January 2012 (lower left side of the chart), you can see there is a gap just under $26. If the stock falls down into that area of $25.50-$26.00, it might be a trading opportunity. Shares of Microsoft closed Friday at $ (Continued on the next page) 4

5 I find it difficult to believe that a stock like Boeing (BA) can do well with the fiscal cliff facing us. However, if this stock can get going, it should make a try for that old high near $77. I don t intend to follow this up; it is intended for informational purposes. If you want an update, just let me know. Shares closed Friday at $

6 Updates (Based on reader feedback, I m going to try to keep a list of all the stocks mentioned in New Ideas, accompanied with stops and targets. As always, feel free to me with any questions.) Ticker Support Resistance Comment JCP (long) $17.50 $19 & $20 AAPL (long) $530 $575 Rumors galore lifted this stock the other day. You should have sold at least half. Support was raised. If it breaks $525, it likely has another leg down, so mind the stop. RVBD (long) $17.50 $18.50 Another rally and reversal. XLI (long) $36.75 JPM (short) $39-$39.50 $41.50 This stopped you out. 6

7 Today s Indicator The Hi-Lo indicator is still rising, but I expect it to turn back down this week. The number of stocks making new highs last week was very disappointing. * * * (For an explanation of the methodology I use for TheStreet, Inc. s Top Stocks newsletter, please click here.) 7

8 Reader Feedback and Questions TheStreet's Top Stocks is intended to provide technical analysis and opinions about stocks and markets. Helene welcomes your questions about TheStreet's Top Stocks and her charting strategy and techniques. Please send an directly to Helene with your questions. However, please remember that TheStreet's Top Stocks is not intended to provide personalized investment advice. Do not Helene seeking personalized investment advice, which she cannot provide. Recently it hasn t been very worthwhile to play the inverse index ETFs unless there has been an outsized move in the indices. ProShares Ultra Short S&P 500 (SDS) is at an interesting spot, though. A bounce off that line ($54.60-$54.70) would look like a small double-bottom, and would probably go to around $56. I would not want to own it if it broke to less than $54.60 because that would leave this area as resistance, and there wouldn t be any support until $53. Shares closed Friday at $ (Continued on the next page) 8

9 Cimarex Energy (XEC) has support at $57, but to my eyes it looks as if it wants to roll over and break that support. The next support level would be down at $55. There would be more at $53, and then again at $50. However, breaking that line around $57 would signal to me that there is no base, but rather a top of some sort. Shares closed Friday at $ (Continued on the next page) 9

10 I reviewed Safeway (SWY) months ago, and at that point the chart was showing a base with a target near $19. Last week the stock jumped up there on all sorts of rumors and innuendos, so essentially it got to its target on the news. However, if Safeway can hold on and meander above that $17.50 area for several days, it might just want to rally again or at least go sideways to digest the gains. Beware of a gap back under $17.50, though, because that would leave these last two days looking like an island, which is bearish. The picture is not the same, but you can see the island this stock formed in mid-february up at the $22 area. That s why you want to respect islands. Shares closed Friday at $

11 Contact Information Customer Service: Please or call TSCM (8726) Mon. Fri. 8 a.m. to 6 p.m. ET; or outside the U.S. and in Canada, call Reader Feedback and Questions: Please send an directly to Helene. Again, please direct all account-related inquiries to customer service. Legal Information Please see the Terms of Use. 11