Weekend Stock Ideas - Week of March 26th

After rallying over 150 SPX points since the start of the year, it's both natural and healthy for the market to pause and digest its gains. While time frames differ among market participants, my view of a 1-year chart of the SPX keeps me bullish for multiple reasons. For one, pullbacks have remained shallow as the market indices continue to make higher lows. This tells me that investors' appetite for stocks is still strong, as they're willing to commit capital at progressively higher prices. Secondly, all major moving averages are aligned in bullish fashion.  When the 10-day MA sits above the 20-day MA which lies above the 50-day MA, it's my "green light" to be involved in the market, as it tells me the trend is decidedly to the upside. Finally, there has been little evidence of any real distribution, which would reveal itself through heavy-volume down days. Market corrections are often preceded by "clusters" of distributions days, as institutions that previously supported the market begin to unload stock and shift to the bearish side. Until these three bullish elements reverse, I'll continue to look to enter stocks that are acting well with strong charts. Below are some of the stocks I'll be watching next week:

With two high-volume gap-ups in the last two months, MDVN has established a pattern of making strong advances and then consolidating on light volume. Since gapping up on over 8x its average daily volume on 3/8, the stock has traded tightly above the 20-day MA on very quiet volume. Those that wanted to take profits have likely already done so, and the stock looks ready to break out to new highs yet again. The pivot point is at the February high of 76.65, and a break above this level would confirm MDVN's next leg higher.

As I mentioned in my last blog post, stocks basing right below all-time highs always attract my attention. Oftentimes, the big moves in leading stocks begin once they break to new-high territory, as all shareholders are profitable and the stock is free to fly with no resistance in "blue skies". N surpassed its IPO high from 2007 in December, and has essentially been basing for the past four months. The stock tried to break out in February, but instead went on to form a base-on-base pattern. With resistance clearly defined at 50, I'll be watching for volume to kick in for a move to new highs.

PAY has formed a short three-week consolidation within an overall basing pattern that goes back to last April. The right side of the stock's base features multiple bullish aspects, including various high-volume up days and support at the 20-day moving average. The pullback over the past few weeks appears to be a handle, which typically serves as the final shakeout of weak holders before the stock breaks higher. PAY has traded within a very tight two point range as of late, showing institutional support and a lack of real selling. Given the constructive price action, PAY could be bought within the current base with the 20-day MA as a stop, or it could be purchased on a break above 51.60.

After finding support at the 50-day moving average in mid-March, EXPE promptly rebounded to its previous resistance zone around 34.50. The stock has spent the past two months consolidating in a three point channel after breaking out of a longer-term base in January. The recent highs coincide with the stock's all-time highs from late 2007, giving more significance to a potential move above 34.50. As always, I'd like to see volume kick in on a move to new highs to confirm the validity of the breakout. 

My personal holdings remain unchanged this week, as I remain long AAP, KORS, NTES, DLTR, and POT.

Feel free to leave any feedback or comments in the section below, or hit me up on Twitter (@CommAveTrader).