On the news that Bin Laden was killed stocks opened today's session mildly higher. As the day wore on stocks reversed course and finished marginally lower. However, the major indexes closed in the bottom half of their intra-day trading range. Market breadth was negative and the trading levels did not indicate investors were trading actively. We are lowering the resistance levels for the DJIA (DIA) and S&P 500 (SPY) based on the current stock market direction (see below). We are keeping the resistance level on the Nasdaq Composite (QQQQ) the same (see below). The support levels on the S&P 500 and Nasdaq Composite are unchanged and we are lowering it slightly on the DJIA. Investor fear picked up as the Volatility Index (VIX) rose 8.4% to 15.99. This was a welcome sign as the stock market has become extremely complacent on the heels of low volatility. If the VIX has found a bottom than an increase in volatility and lower prices ahead for stocks can be expected. Energy shares were hit the hardest in today's session as oil declined and settled near $113 a barrel. The prudent approach right now is not get aggressive with new positions in stocks. If you are heavily invested in equities protect your profits and keep your losses small just in case the market decides to go into correction mode. If you need to own stocks, please see our watch list below. This morning we posted a list of stocks that might be good candidates to sell short. We will provide updates on the list as thing develop. Please see our prior post for the list of stocks.
The following is a list of stocks that might be good candidates to sell short. We will track these outside our watch list and provide updates on them as things develop.
These stocks have the following characteristics:
- Stock price is currently higher than analyst target price.
- Stock price is selling at a significant premium relative to its future earnings growth rate as measured by its Forward Price-Earnings (P/E) Ratio and Price-Earnings Growth (PEG) ratio.
Company Name Symbol Sector Current Price Analyst Price Growth Rate Forward P/E PEG Ratio
Alcatel-Lucent (ALU) Technology $6.54 $5.72 5% 25 5.0
Acme Packet (APKT) Technology $82.61 $76.38 22% 91 4.1
ARM Holdings (ARMH) Technology $31.46 $26.23 18% 82 4.6
Aruba Networks (ARUN) Technology $35.92 $31.92 26% 353 13.6
Consolidated Edison (ED) Utilities $52.12 $50.59 3% 15 4.7
First Industrial Realty Trust (FR) Financial $12.52 $10.79 3% 15 4.9
Fortinet (FTNT) Technology $48.70 $45.91 17% 85 4.9
L-1 Identity Solutions (ID) Services $11.73 $10.67 20% 292 14.6
North American Palladium (PAL) Materials $6.43 $6.00 2% 42 21.1
Universal Display (PANL) Technology $54.94 $38.50 40% 553 13.8
Vornado Realty Trust (VNO) Financial $96.68 $90.27 3% 17 5.1
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No positions in securities mentioned.