Ctrip.com (CTRP)

There are two dominant liquid Chinese leadership stocks in the current rally. One is BIDU. This other is online travel website Ctrip (CTRP).

In continuing market rally we feel CTRP is only higher. YOY sales and earnings have accelerated for three quarters in a row, with strong projections for at least the next two quarters.

CTRP is a hard stock to buy and hold. It is whippy and has a tendency of correcting violently. But the uptrend is clear and so is the correct way to enter this stock: when no one appears to want it.

Tuesday, in the midst of a robust holiday rally, CTRP broke down on some volume and bounced off its 10 MA weekly. This is often an ideal place to initiate a position. The stock finished off its lows of the session and yesterday took out the highs, indicating price is likely to recover and attempt new highs.

We are entering a long at the market this morning, around $73.50. Our stop will be Wednesday’s low of $70.55. Our goal, as always, is entry for a resumed uptrend in the stock.

Randgold Resources Ltd (GOLD)

We predicted an uncomfortable correction in gold and recommended taking some profits off the table in our GLD ETF trade several weeks ago. We thought the quick move higher in gold would lead to a correction that was sufficiently disorderly that traders would question whether gold had topped or was simply undergoing a correction. When sentiment shifts like that it can make it hard to hold a winning position.


That is where we are now with the price of gold. It has blown through two reversal setups and that often leads to even lower prices.


But as our readers know, we believe the best money is to be made by expecting the unexpected. What if gold, which seems poised for lower prices, recovers here? Miners scored significant gains during gold's rise. Is there a miner that is acting constructively on this pullback and appears to be a good entry on a gold reversal?


The answer is yes. And the miner is Randgold (GOLD). Alone among liquid gold miners this stock has held its 50 MA. We like that it broke below a recent consolidation, appearing to threaten a more significant breakdown, but didn't follow through. That "failure of failure" can often be a good entry point.

The price of gold seems to be stabilizing this morning. Whether this represents a permanent turn or not we cannot yet know. But we'll take long entry in GOLD on a move over $80.75 with a stop under $78.

Amazon.com (AMZN)

This Internet retailing behemoth has been one of the strongest performers among institutional quality stocks over the last several months. It is in a torrid uptrend that has cooled recently as the stock has drifted back to its 10 MA on rather light volume over the last few weeks.

We have discussed this stock on our sister blog this morning as an important bellwether at an interesting buy point. We invite you to review our comments and consider a position as the stock lifts off of what is ordinarily a key area of support for an uptrending stock.

Bucyrus Int'l (BUCY)

This morning the company, in which we had previously taken a position, has acquired Terex'es excavation business, which they claim will be immediately accretive to earnings. This is an all cash deal, making it all the more bullish.

BUCY has formed a five week Square Box second stage base. The last three weeks mark tight closes. We don't care for the topping tails on the weekly chart, but today's news is a company altering event. The stock is breaking out to new highs on enormous volume and we believe it is a buy, or an "add to" at the market.

Apple (AAPL)

Readers probably tire of us saying this, but AAPL has been the most important stock in the current market rally. It has the most institutional sponsorship among winning stocks this year.

For only the second time this year it has paused to form a base. History teaches that stocks rising out of constructive bases provide the lowest risk entry points for gains.

AAPL has formed a seven week Square Box pattern. According to O'Neil these patterns only last seven weeks so we should expect a move one way or the other imminently. Two weeks ago price broke below its 50 MA but last week price made a power move back over the line. It closed the week just below as it retraced some of its gains on light volume.

Should the market assert itself and launch another leg higher we believe AAPL will be in the vanguard of stocks scoring fresh gains. We'd be buyers of any volume move over the brief downtrend line in the base, which could indicate a fresh break out is underway.

Dow Chemical (DOW)

Dow Chemical (DOW) had a near death experience in its takeover of Rohm and Haas last year. They offered a rich premium and committed to significant debt as the economy was imploding. They desperately tried to extricate themselves from the deal but were legally bound to it.

Turns out that was a good thing.

Dow's stock price has about quintupled off the market lows. And recently they announced the consolidation of the Rohm buy is going so well they expect FY '12 EPS of $4-4.50 per share, well above analyst views of $2.50. The increased earnings power means that DOW is trading at little more than 6x's 2 year forward estimates.

The stock gapped to new 52 week highs on the news but has since eased back to the 50 MA where it has found support.

We like it here as it gaps modestly higher this morning. We'll use $26 as our stop. Our objective is to treat this as a core holding in a recovering economy.

Bucyrus Int'l (BUCY)

The pick and shovel companies that assist miners in their operations have had an excellent run, none more so than Bucyrus (BUCY). With solid growth the company recently gained better than 60% out of a cup with handle base and has now paused to form what O'Neil calls a Square Box base.

We have every reason to expect mining to remain strong and thus seek entry into this stock. We are intrigued by the way price recently undercut the lows in the base and then bounced back. Today price is starting to push back higher and we are buying at the market with a stop under $50. Our objective is to participate in a break out to new highs.

Competitor Joy Global (JOYG) is set to release earnings next week. Although BUCY will not report until February this event should be a near term catalyst for the stock.