Small-caps Rebound - Plus A Big Chemical Breakout, an Industrial Breakout, Four Tech Corrections and Two Big Pharmas Perk Up | Art's Charts

.... Small-caps Bounce Back from the Abyss
.... Lots of Winners and Losers Out There
.... A Big Chemical Stock Breaking Flag Resistance
.... An Industrial Stock Bouncing off Support
.... Four Tech Stocks with Small Corrections
.... Big Pharma Stocks Perk Up
.... Three Miscellaneous Stocks: FBHS, SYY and XRAY....

Small-caps Bounce Back from the Abyss

Well, perhaps the word "abyss" is a little too strong. The S&P SmallCap iShares (IJR) and S&P MidCap SPDR (MDY) fell sharply on the open Wednesday and then rallied back the rest of the day. Both were down around 1% within the first hour and finished virtually unchanged. As noted before, I am an end-of-day (EOD) trader and try not to watch the fluctuations during the day. The close is the single most important price of the day and closing prices dictate my decisions. The chart below shows SPY hitting a new high four days ago and trading flat the last three days. IJR and MDY dipped below their support zones in the morning and rallied to close just above support. A close below 68 in IJR and 311.9 in MDY would break short-term support and reverse the upswing. The bulls are clearly in control as long as these levels hold. âLots of Winners and Losers Out There

The market as a whole remains mixed since March 1st, 64 trading days ago. Within the S&P 1500, 728 stocks are up and 772 are down over the last three months. Of these stocks, 315 are up more than 10% and 343 are down more than 10%. The edge is still slightly in favor of the bears, but there were plenty of opportunities to make money over the last three months, 315 opportunities to be exact. The performance divisions are point to a split market and this means it is a stock picker's market. Overall, I would avoid banks, autos, retail and energy. I would focus on technology, consumer staples, utilities, industrials, housing, chemicals, airlines, insurance, railroads and defense-aerospace. Some groups, such as biotechs and REITs, are mixed. Picking individual biotech stocks, however, is as difficult as it gets. In keeping with the stock picker's theme, I will share some setups that came across my screen today. Given the split performance in the market, readers can expect half of these picks to fail and half to succeed. No sense in sugar coating it!

A Big Chemical Stock Breaking Flag Resistance

Air Products (APD) is a big chemical concern from the Materials SPDR (XLB). The stock corrected with a deep decline into March, but held above the October low and ultimately formed a higher low with the surge-breakout in April. The falling flag in May caught my eye as a short-term correction and this appears to be ending with the breakout last week.

An Industrial Stock Bouncing off Support

Emerson Electric (EMR) has been on my watch list since late March when it first hit the 57-58 area. Overall, the industrials sector is strong and this stock is in a long-term uptrend (two pluses ++). The falling wedge since late February looks like a correction within this uptrend. The late April surge above 60 failed to hold as the stock fell back, but support did hold and a mini-breakout triggered on 19-May. This is the first sign that the correction is ending. A follow through close above 60 would break the wedge line.

Four Tech Stocks with Small Corrections

The next four stocks come from the technology sector and all three are currently in some sort of correction. First, here are three things to keep at the top of your stock selection checklist: broad market trend ($SPX), sector trend and stock trend. The S&P 500 has been in a long-term uptrend since the 50-day EMA crossed above the 200-day EMA in mid April (+). The Technology SPDR (XLK) is a leading sector and clearly in a long-term uptrend (+). All three stocks are above their 200-day EMAs and their 50-day EMAs are above their 200-day EMAs (+). If these three items are positive, we should only look for bullish setups and IGNORE bearish setups. Personally, I like to look for stocks that are correcting within long-term uptrends and these four fit the bill. Citrix and Seagate are just below their 50-day EMAs so I am watching for an upturn here. NTAP is firming in the 39-40 area and an upside volume is picking up. JNPR surged and fell back to the breakout zone.

Big Pharma Stocks Perk Up

The healthcare sector is a bit mixed right now, but I am seeing signs of life in a few big pharma players. Johnson & Johnson (JNJ) and Abbot (ABT) surged to new highs this week, while Merck (MRK) advanced around 5% from its late April low. The first chart shows Eli Lilly (ELI) surging to 52-week highs in March-April and then falling back to the rising 200-day EMA in late May. The stock surged on Wednesday and broke the wedge line. This is the first sign that the correction is ending and the bigger uptrend is resuming.

Pfizer (PFE) also surged with good volume on Wednesday. Overall, the stock advanced over 10% in January-February and then retraced 50-61.8% with a decline back to the 32 area. Even though the stock closed below the 200-day EMA, the retracement amount is normal for a correction. Thursday's mini-breakout is the first sign that this correction is ending.