Sell Kraft, Johnson & Johnson, Wal-Mart

Kraft Foods Inc (KFT US; US$22.35) – SELL

• From the chart, Kraft appears to have formed a bearish flag pattern. It also closed below its 30-day SMA on volume. A break below the US$21.92 support could see the stock tumble back to retest the March low of US$20.81 next.

• Technical indicators continue to show signs of weakness, supporting the bearish view. The MACD is about to confirm its dead cross.

• Any rebound towards the US$23.49-23.98 resistance levels should be seen as an opportunity to sell.

Johnson & Johnson (JNJ US; US$51.41) – SELL

• J&J has rebounded from a low of US$46.25 to current levels. The stock now needs to stay above its 30-day SMA at US$50.68 for a retest of the strong resistance at US$55.00-56.00. Otherwise, increased selling pressure could kick in with the next support at US$48.96 and US$46.25.

• Indicators are still marginally positive but losing momentum. Its MACD is about to confirm its negative crossover.

• There is a strong possibility that the stock may rebound a tad more but could the find the US$55-56 resistance levels difficult to break. Investors who got in earlier may want to unload close to those levels.

Wal-Mart Stores Inc (WMT US; US$50.66) – SELL

• Wal-Mart briefly broke out above its medium term resistance trend line but the bulls could not sustain the buying momentum. It fell back below the breakout level with a huge gap down. It has formed a reversal pattern called island reversal.

• Both its longer and shorter term indicators are starting to decline again, suggesting that there is more downside from here. Its MACD has just confirmed its dead cross while its RSI has fallen below its support, signalling that selling momentum is picking up.

• Sell on any upticks. Resistance is seen at US$52.22-52.66 while support is weaker at US$49.58 and US$47.95. A break below US$46.25 is very bearish for the stock.

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Sell Pfizer, JPMorgan Chase, Buy AT&T

Pfizer Inc. (PFE US; US$14.04) – SELL

• Pfizer rebounded from its 52-week low of US$11.62 to test the 38% FR levels (measuring from a high of US$19.39 and a low of US$11.62). Although a cut above its 30-day SMA is positive, it appears that sellers are queuing to sell at US$14.60 (38% FR). A short term consolidation is likely to take place before renewed buying interest lifted the stock towards the 50% FR at US$15.50. There could also be a minor resistance at US$15.00.

• Technical indicators are showing signs of exhaustion, supporting the change in momentum towards the bears. MACD is losing momentum and may dip into negative while RSI has also turned south.

• There is a strong possibility that the stock could ease towards the 23.6% FR at US$13.45, which is also near to its 30-day SMA. Aggressive investors looking to buy may want to wait for a pullback. Cut losses however if prices fall below US$12.94.

JPMorgan Chase & Co. (JPM US; US$27.40) – SELL

• The stock has rebounded sharply from a low of US$14.96 in early March to penetrate above its 30-day SMA. Despite Friday’s pullback, the stock is likely to maintain its short term uptrend channel, though the congestion zone over the past one week may suggest that a correction is forthcoming. The neutralisation process would underpin future strength with next resistance near US$32.25.

• The daily MACD indicator is showing an easing trend while RSI has also hooks down. It may be best to sell into strength for now as buying begins to lose momentum. We expect further retracement on its share prices.

• We envisage investors to buy only during technical pullbacks as the stock has climbed >90% over the past three weeks. Buying between its 38% FR at US$23.60 and its 30-day SMA at US$22.50 is a low risk buy. Put a stop at US$22.00 in case things turn out badly.

AT&T Inc (T US; US$26.00) – BUY

• AT&T’s strong rebound has pushed the stock above its 23.6% FR levels and also its 30-day SMA but buying began losing momentum. It did not ride the wave to test the next key resistance, which is also the 38% FR at US$28.46. This week is crucial as sellers may push its share price below US$25.50 to conclude its recent upward trend.

• If the stock breaks below US$25.50, the next key support is at US$24.10 which is also its 30-day SMA. MACD momentum is waning while RSI is also heading southbound, reinforcing our short term negative view on the stock.

• On the other hand, if the US25.50 support holds, there is a marginal chance for AT&T to resume it uptrend rally to test the US$28.46 resistance. Breaking above the 38% FR would see the stock rising towards next upside target atUS$29.46.

Buy Microsoft, Cisco - Sell 3M

Microsoft (MSFT US; US$17.06) – BUY

• From the chart, Microsoft is still sitting on the lower band of its long term downtrend channel. It has rebounded from a low of US$14.87 to current levels to retest the middle band resistance at US$17.20. Its 30-day SMA at US$17.22 is also standing in the way of the bulls. A breakout would be bullish for the stock and a retest of the upper resistance at US$20.20 is likely in the medium term.

• Technical indicators are showing signs of bullishness, supporting the change in momentum towards the bulls. However, its very short term indicators are overbought, suggesting that a pullback is likely.

• Aggressive investors looking to buy may want to wait for a pullback to S$16.18 or S$15.50 to buy. Cut losses if prices falls back below the Mar lows of S$14.87.

3M (MMM US; US$45.93) – SELL

• The stock rebounded sharply from a low of US$40.88 and tested the breakdown level of US$50.00. However, it failed to break back above the said resistance. The stock is likely to undergo a minor correction in order to regain the buying momentum.

• Indicators are marginally positive but losing momentum. Its MACD and RSI are starting to turn lower.

• There is a strong possibility that the stock could ease to US$42.96-44.26 next with a possibility of falling back to its low of US$40.88. Sell on upticks towards the US$50.00. Only a breakout above US$50.00-51.00 levels would see a change in trend.

Cisco Systems INC (CSCO US; US$15.91) – BUY

• Cisco’s strong rebound has pushed the stock past its downtrend channel resistance at US$15.94 recently but the buying began losing momentum. It closed back below its downtrend channel resistance. The stock needs to recover above this resistance to test the next resistance at US$18.00 and US$20.30 in the medium term.

• For now, its longer term indicators are starting to improve. It may be best to buy on weakness here. It daily indicators show a loss of momentum for the buyers, suggesting further retracement is likely.

• Buyers looking to buy Cisco may want to wait a while before buying. The 50% FR retracement from a low of US$13.61 to a high of US$16.94 is US$15.27 while its 62% FR is at US$14.88. Its 30-day SMA is at US$15.32. So, buying in a cluster of support at around these US$14.88-15.30 levels is a low risk buy. However, put a stop at US$13.55 just in case things turn out badly.

Bank of America's Bernstein Says Sell Bank Stocks After Rally

Investors should sell bank stocks after they rallied 12 percent today because the Treasury Department's plan to buy toxic assets won't stop profits from dropping, Bank of America Corp.'s Richard Bernstein said. Removing devalued loans and securities from banks' balance sheets is a short-term solution that will delay the problem's ultimate solution, which is bank takeovers, Bernstein said. The government won't be able to inflate the prices banks receive for selling bad assets indefinitely, he added.

"The history of bubbles shows quite well that financial sector consolidation is inevitable," Bernstein, Bank of America's chief investment strategist, wrote in a research note. "Financial stocks will be attractive when the government tries to speed up that inevitable process. However, to the contrary, the government continues to attempt to stymie that inevitable consolidation."

The Standard & Poor's 500 Financials Index has climbed 51 percent since March 6 after Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. said they've become profitable. The measure surged 12 percent as of 3:10 p.m. today in New York.

Bernstein compared the U.S. plan to Japan's response in the 1990s, when the government, faced with public opposition to its bailouts of banks, waited before trying to fix its financial system. That resulted in the "Lost Decade," in which economic growth averaged less than 1 percent a year and the unemployment rate more than doubled.

The Obama administration unveiled its plan to remove toxic assets from the books of the nation's banks earlier, betting that it can revive the U.S. financial system without resorting to outright nationalization.

The plan is aimed at financing as much as $1 trillion in purchases of illiquid real-estate assets, using $75 billion to $100 billion of the Treasury's remaining bank-rescue funds. The Public-Private Investment Program will also rely on Federal Reserve financing and Federal Deposit Insurance Corp. debt guarantees, the Treasury said in a statement in Washington.

Buy BOA, Sell GE and HP

Bank of America Corp (BAC US; US$5.76) – BUY

• Since our last Technical sell call, the stock fell to only US$3.00, short of its multi-year low at US$2.55. As we mentioned in our earlier report, the downtrend would likely have ended if the stock were to take out is bullish wedge resistance. Not only did it breakout of its bullish wedge pattern, it also surpassed its 30-day SMA, which is another bullish sign.

• Technical indicators are showing signs of bullishness, supporting the change in momentum towards the bulls. The breakout of its RSI is a plus and together with the bullish divergence on its MACD, the trend may have change. We need to see higher highs and higher lows to confirm the change in trend.

• Since its very short term indicators are extremely overbought, there could be a pullback soon. A pullback to its 30-day SMA at S$4.90 or S$3.66 (its wedge support) could be an opportunity to buy. Cut losses if prices falls back below the Feb lows of S$2.55. Note that there is still a big risk to take even buying at lower levels.

General Electric (GE US; US$9.62) – SELL

• The stock rebounded sharply from a low of US$5.73 to current prices in 2 weeks. That is a gain of about 68% without much correction. GE is also facing some resistance around current levels. Failure to take out its 30-day SMA (at US$9.74) would suggest that there are still a lot of sellers out there.
• Indicators are marginally positive. Its MACD continue to expand but its RSI is still in a neutral position.

• There is a strong possibility that the stock could ease from current levels to close the gap at USS$7.83-7.95. Support is seen at gap levels and also at US$8.40. Sell on upticks.

Hewlett-Packard Co (HPQ US; US$29.45) – SELL

• HP’s strong rebound has pushed the stock close to its 38.2% Fibonacci retracement (FR) levels (US$30.10). There is also a gap at US$29.96-30.08, which could act as a resistance as well. For now, the trend is still down unless this rally is strong enough to take out the 62% FR levels at US$33.00. Only then, the outlook would change for the better.

• In the short term, there could be a tad more upside but we do not expect it to be strong. MACD has just confirmed its golden cross but its RSI is still below the neutral mark.

• HP could retrace back to try to close the gap at US$27.11-27.60. A break below could even see the stock fall back to US$25.40 next.

Nasdaq in downtrend, sell Google and Intel

Nasdaq Composite Index (1,293.85)
Resistance: 1,318 – 1,370, Support: 1,253- 1,180

• Nasdaq had a lowest close in more than 5-years yesterday, closing marginally below its Nov lows at 1,295.48. This triangle formation breakdown is bearish. As with Dow, the Nasdaq is also in its fifth and final wave downwards to complete this major downtrend that begun in Oct 2007.

• MACD dipped further into the negative territory while RSI has yet to reach the oversold zone, both suggesting that there is more weakness ahead in the near term.

• Any potential rebound is likely to be met with fierce selling pressure. Resistance is seen at 1,318 and 1,370 while support is at 1,253, 1,212 and 1,180. These support levels could be tested in the coming weeks.

Google Inc (GOOG US; US$308.57) – SELL

• The uptrend from the Nov lows appears to have ended after Thursday’s bearish breakdown. The stock closed below its US$312.76 channel support (now turned-resistance), which suggests that the longer term downtrend is about to resume. The confirmation would be a fall below US$282.75, its Jan low.

• Indicators have stayed weak. Its MACD has just moved into the negative territory while its RSI is falling into the oversold region. The RSI has yet to reach oversold levels, suggesting that there is still room on the downside.

• Investors ought to sell on strength as the stock could now ease to test the US$282.75 support. If this support breaks, Google could be heading back to its Nov lows of US$247.30. Following resistance is seen at US$325.00 and its 30-day SMA at US$341.00.

Intel Corp (INTC US; US$12.41) – SELL

• The stock appears to be testing its descending triangle’s support at US$12.00. A break below this support is bearish and would suggest that the longer term downtrend has resumed. It could ease to US$9.80-10.00 if the said support breaks.

• In the short term, the stock could see a minor rebound but the rebound would likely be weak. More downside would follow as both its MACD and RSI have remained negative. The stock is also trading below its 30-day SMA.

• Any rebound towards its resistance at US$13.31, its 30-day SMA could be seen as a chance to sell.