Though not cheap, HES, an oil explorer/driller is very much a Fallen Angel, crashing down from $140 to $40. After forming a bottom in October 2008, HES has traded sideways, locked between 50-70, forming the classic “L” pattern. Now 16 months later, HES is starting to get perky, acting like it wants to rise, probably to around 90. Notice the narrowing Bollinger Bands that are foretelling a coming increase in volatility on the weekly chart. On the daily, we’ve jumped the fence as the squeeze kicked in and closed for two days outside the bands–a definite sign of strength. New buys should be on weakness, but pay attention because HES may not pull back much. These big base stocks are gifts and traders should work hard to exploit them.

I admit to recent inattention to a few stock groups–business demands, and more focus on ETFs and gold stocks being the culprits. Much has gone on in groups that had been appealing months, even years ago. In some cases, like the solar stocks, the Bear has trashed them behind recognition.WFR, a former high flyer in the 2006-2007 period, plunged from around 100 to the 12-14 level even as oil prices recovered to $80. In fact, almost the whole group of former solar stars–FSLR, LDK, HOKU, ASTI, SOL, ESLR–have thudded down from unsustainable highs. Now, months after sideways action, they are AFAs, or Alex’s Fallen Angels.As most know, these are former high flyers that have crashed and burned, yet still have a pulse in charred remains. Or, less descriptively, they have formed a really big ‘L” on the weekly charts, price is close to the flattening long-term MAs, and there are subtle signs of accumulation on the daily charts. Most of the solar stocks in my database fit this pattern, more or less, and I’m looking to buy them on weakness. The daily chart of WFR clearly shows renewed interest, or accumulation, in the FI and the upturned MAs. We have even managed to get to ST/OB and a break of the volatility bands, two signs that the game is on. I’m looking to buy on a bounce off the rising 20 EMA for a run to the 200 SMA. Generally, we should find resistance at the 200 SMA and another pullback and retest and eventually, we pop through and start a bull run.While I’m expecting some sort of market correction soon, it wouldn’t surprise me to see the solar stocks and probably the biotechs, morph into leaders for 2010.

As we closed out the month of November and head into the last month of the year, we thought we would post the equity performance of the leading Spikers. 8 Spikers have outperformed the SP-500 this year as the end of November. 11 Spikers are outperforming their peers. All 11 Spikers are in double digit returns and one has triple digit returns thus far for 2009.Lets look at the list and see the equity curves of the top 4 Spikers Year to Date…We have one month remaining in 2009, my how time flies! Sergey leads the pact with a triple digit return of 142%, followed by Colin, Steve, and Jeff. We posted those Spikers that are outperforming the group average YTD along with their recent 4 week performance. 68% of the Spikers are positive for the year. 42% are outperforming the SP-500. This is all accomplished by restrictions of the Spike rules of one pick per week and bet the entire amount on that pick. Amazing Spikers, simply amazing!!!

Banks negatively diverged from the SP500 and did not participate in the recent rally to new highs.They now have formed lower highs. This along with weakness in small and mid caps show why this market has been so thin and market breadth so weak.When we have these type conditions, most long strategies are not following thru. Only a few stocks are working and many of those have been difficult to find good risk reward entries.All the best!Kerry

Those who have been hanging around Spike Trade for awhile probably remember watching Alex and his past epic trading of CPST, an alternative fuel company. It was a multi-month drama–full of reward, bruises, and redemption. As we watched Alex wrestle with this small-cap rocket, I realized we were watching a master at work, picking entries and timing exits skillfully. It was very educational, and maybe one day Alex will take us through another long-term trade, so generously sharing his thought processes.Flipping through my charts yesterday, I stumbled on CPST again. I noticed that it has avoided complete disaster–though plunging from a high of $4 to a low of $0.45. After several months of sideways action, we’re now recapturing the 39 week EMA. This is about as clear a Fallen Angel pattern as you will see; so it may be in our best interests to pay attention. The weekly chart clearly shows support around 1.14 and resistance at the 5-week EMA around 1.20. The daily chart shows price is ST/OB and it looks like a squeeze is developing. Target is around $2.50. Personally, I’ll wait until the short-term indicators sag before taking a shot; and for now it goes on my watch list with a glow of anticipation.

New members often ask what brokers we prefer.

When I saw this picture last week, my immediate response was that retailers are not going to have a good Christmas. This picture represents 12% of the world’s container ships that are sitting idle in the ocean off Singapore. The article said that the cost of transporting a 40 ft container of merchandise from China to the UK has fallen from

Here’s a potential trade that offers lots of promise, but is ST/OB so not suitable for next week’s Spike pick. SYT is all about long bases and moves within the Bollinger Bands. After hitting a yearly high around 51 in January, SYT has been grinding sideways, oscillating back and forth between the bands. Note on the weekly chart that all this sideways stuff is along the 50% Fib retracement from the 2008 high to the 2008 low. Now on the daily, the squeeze is in play and SYT has touched the upper band signaling it is ready to move. I’m inclined to wait for some sort of retracement–maybe 1-3 days–to the rising EMA before buying. Eventually, we should get a nice rise out of this long base and lots of chances to trade it back and forth from the rising EMA to the upper bands.

Dear Spikers & Members,hello from Cape Breton, at the northern tip of Nova Scotia. Some of you have asked me to post a few photos from this roadtrip. Now, keep in mind, this post is completely not-trade-related. Simply, a few snapshots from the road.What the pictures do not show is how I remain in daily contact with Kerry, planning new enhancements for SpikeTrade. You will be seeing the results very soon!Best wishes from Canada,Alex