Going for a Bounce-to-Base Transition

Last week about half the stocks in the S&P 500 were pinned around their 50-day moving averages and Wednesday that number was about the same. The speculative sense of the market, however, has advanced past the potential for a short-term bounce and moved towards the possibility of an intermediate-term base. These three stocks are candidates to make the bounce-to-base transition.

The first is 3M (MMM), a solid dividend payer. The stock has been holding in the area of the former June high, its 50-day moving average, and the uptrend line drawn off the lows since May. It has followed a large down day with a large up day of equal range, forming a two-day reversal, or candlestick tweezer pattern. The relative strength indicator is crossing above its 21-period signal average and centerline, and moving average convergence/divergence is attempting to make a bullish crossover. Volume is about equal to the 50-day moving average of volume, but the money flow index, a volume-weighted measure of relative strength, is crossing above its centerline. The $115 level is acting as the first level of resistance and the intersection of resistance lines in the $112.50 area is the first level of support....161 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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