After sliding lower for the first three and a half months of trading, Facebook Inc (FB) found bottom in early September, which was confirmed with a higher low in October and finally a higher high in November.  The stock then powered higher along with the rest of the market, rallying 32% from November 26th until it found horizontal resistance on January 28th near $32.50, which acted as an area of resistance in May and June, and still does to this day.

The other key lateral level to watch lies around the $24.50 mark (red dotted line), which acted as resistance until the November 28th breakout, and ever since turned into support.  In late March the stock tested the $24.50 area, from which it proceeded to bounce.  The bounce however has been sloppy and choppy, yet did manage to define a new pattern on the chart: a down-trending channel (blue parallel lines), which in this case may be defined as a bull flag.  If you are unfamiliar with the pattern, this type of formation usually resolves to the upside.  Either way and anyway, the bottom line is that as mentioned above, the stock currently sits in no mans land and to yours truly a real long-side entry likely wouldn’t be interesting at this point unless the stock can close above the early May reaction highs near $29, and thus on a break out of the bull flag formation.

Zoom in a little bit close however, and a first hopeful sign is to be spotted on the stock’s chart looking back to 2010.  Namely, the stock’s down-trend from the April 2010 highs finally managed to break in November 2012, which ultimately led the stock to rally into January 2013.

Despite the stock’s breakout past a first significant down trend this past November, the stock is still trading fairly sloppy.  This, as a result leads me to draw levels of interest on the chart rather than take a stand right here right now with a directional trade.  Despite the sloppy chart, Nokia Corp (NOK) has none the less displayed some relatively tight patterns over the past nine months or so, as noted on the chart below with the simple blue trend lines.  The stock’s 4.50% + drop yesterday however raises a small red flag.  In the event the stock can overcome yesterday’s weakness and throw itself back above Monday’s closing price near $3.85, I could get interested in the long-side of the stock for a move back to near the January highs of $4.70.  Other than than, from a longer term point of view the stock has much more to prove before I will become interested in trading it with any consistency.

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The breakout of solar stocks last week is simply the continuation of the theme from the past few weeks where one group of stocks after another is breaking out.  If the broader market can keep it up then this group too should see more investors chasing it higher.

So on the daily chart note the higher low that Guggenheim Solar ETF (TAN) developed in early April, versus its November 2012 low,  which ultimately led to new 2013 highs just yesterday.

First Solar (FSLR), which is higher by 75% year to date is the largest holding in Guggenheim Solar ETF (TAN), with roughly 19% of the fund allocated to this stock.  First Solar (FSLR), and by extension also the solar energy exchange traded fund, is somewhat overbought in the immediate term, however any constructive consolidation above $20.50 for Guggenheim Solar ETF (TAN) now favors further ups in coming weeks.  Important to note however is that given the strong rally in the broader stock market, any significant one-day bearish reversal in the S&P 500 would likely also lead to some profit taking in the solar energy names as well as the exchange traded fund.

As it pertains to stocks that make vertical leaps, they often fall into one of four three categories, 1) m&a activity 2) major product approval by a regulatory body 3) a lawsuit or other threat gets lifted or resolved 4) the company overnight has the hottest product in the world.  In the case of Tesla Motors Inc. (TSLA), clearly number four applies best.  However great the Tesla cars are however, chances are slim that by next week everyone and their grandmother will be purchasing two Tesla cars each, and thus the stock will soon have to put in some sort of a mean-reversion move lower.  Much like with Apple Inc (AAPL), emotions are now running high in the stock and one would be wise to tread carefully when playing this stock, in either direction that is.

On the multi-year chart below the recent doubling in the stock price marks the chart with  vertical spike higher.  Also very typically of such spikes, this rally in Tesla Motors Inc. (TSLA) comes after a multi-year move higher in the stock.

On the daily chart, note that while the stock spiked higher, momentum as measured by the stochatics indicator has moved lower, thus flashing negative divergence versus price.  While that’s a first bearish sign, its by most accounts not enough to get leaning against the stock.  Just like stocks that fall off a cliff, stocks with vertical moves need time to digest, allowing the emotions to settle somewhat before higher probability trades set up again.  In the case of Tesla Motors Inc. (TSLA), Only a major one day bearish reversal move would get me interested on the short side for a trade, while playing the long side of the stock won’t fit my bill until the stock has either corrected a few percent or moved sideways for at least a few days.

Knowing when to stay out of a stock is one of the most important things to learn in this business.

On the multi-year chart below, Coach, Inc (COH) had reached a scary support level back in late February, where any break below could have accelerated the downside move.  It doesn’t take too much imagination to envision a big head and shoulders formation in the stock, with the neck-line representing the crucial support level.  Instead of breaking below support however the forces that be came to rescue and quickly lifted the stock , which eventually led to the previous weeks’ sharp rally.

After a sharp rally, thanks in good part to the stock’s April 23rd post earnings announcement pop the stock consolidated the move for the first week and a half of May.  Last Friday, May 10th however, Coach, Inc (COH) rallied 1.66% on the day and in so doing pushed past a crucial near-term resistance zone near $59, which served as the upper end of a tight pattern.  This sort of tight trading pattern is exactly what I am looking for in the current environment where the broader U.S. stock market is likely fairly extended in the medium term, yet tight stock patterns still stand a chance of breaking higher.

Given last Friday’s break past the $59 resistance point, the path is now clear for a move up to next resistance which lies between $62.00 and $63.20.  Momentum favors longs in Coach, Inc (COH) still, yet any meaningful one-day bearish reversals will need to be taken serious.

From a medium term perspective the marginal overshooting past the $33 area has not changed my thesis and I continue to favor the odds of a consolidation phase here near-term for Microsoft Corporation (MSFT) rather than a further meaningful rally.  In fact, the move from $33 to $33.91 bumped the stock into the upper end of a wide trading range, which has defined resistance at an up-trending line dating back to May 2008.

In the long-run I still see the stock moving higher however, as the series of higher lows and higher highs off the 2009 lows looks constructive.  As such, long-term holders of Microsoft Corporation (MSFT) may be able to sell calls against their positions on upticks in volatility on a continued basis over the coming years and by so doing enhancing the yield on their holding.

The stock’s year to date rally of 23.50% however has taken its chart-vertical, which in the near-term is not sustainable at this rate.  From April 18th to the highs on May 6th the stock rose close to 18%…in a little over two weeks that is.  The sharp rally also quickly and easily pushed the stock past diagonal resistance dating back to March 2012, which gave the stock free range to shoot to its recent highs.  Given the animal spirits at work currently in the broader market I am not considering the stock from the short side but rather am waiting for a better consolidation phase to set in.  Did the past three days of selling signal the start of a real consolidation phase?  Only time will tell, but I am  more interested in the stock again from the long side if it can re-test a previous resistance level from September 2012 around the $31.60 mark, give or take 20 cents or so, or alternatively trade sideways for a couple of weeks.

Onwards and upwards, let’s look at the charts.

First-up, the longer term chart looking back to the summer of 2011 gives us some perspective as to the level where the stock recently found a ‘bottom.’  The July 2011 through January 2012 period served as basing time for Apple Inc. (AAPL) and in this important trading range is also where the stock recently bounced from.  The area remains important if and when the stock should ever head down there again.

On the closer-up daily chart of Apple Inc. (AAPL) note that the stock has now bumped into its down-trending 100 day simple moving average (blue line) near $463.  While the stock is immediate-term overbought, the break of the September 2012 downtrend puts the stock into a positive formation that should lead to further gains in coming months.  I am not looking to chase the stock higher here, but a break above $466 should lead to a first target at $485, followed by $510 – $514, which would fill the earnings down-gap from January 24th (blue shaded area).

Last but not least, for those wanting a real close up look of the stock, here is a 5 minute interval chart looking back several trading days.  The white horizontal lines serve as interesting areas of support, as does the 200 period moving average (blue line).  Shorter term traders can use these reference areas to base trade against.

The 2013 rally has frustrated many a bear, yet from a trader’s point view, the struggle seems silly if you can just stay the trend – easier said than done mind you.  The S&P 500 above 1600 (funny as that seems to write), the longer the index manages to stays above there the higher the chances that its next upside target will be somewhere between 1640 – 1660.  From where I sit, if last Friday’s post jobs report rally was to be a so called pop and drop reaction, the drop should have already at least in part occurred by now.

To yours truly the name of the game is to stay the trend, at least for another 20 – 40 points for now.  The melt-up can continue as funds must chase the market higher and the retail investor is increasingly being left out of it all.  When would it be time to get more defensive?  Any significant one day or multi-day reversal formation should make you sit up in your chair and get more defensive for the near-term.  There are plenty of arguments to be made that the tape is at least near-term extended.  For example, the S&P 500 is currently as much above its 200 day simple moving average as it was below it at the lows in 2009.  Always consider both sides of the tape.

From a long-term perspective note that the S&P 500 is now well past its previous all time highs and if the rotation into cyclical sectors continues, could continue higher from the longer term time-frames as well.

Last week the rotation from more defensive sectors into cyclically-exposed sectors became apparent.  The below intra-day chart from last Friday and yesterday shows this particularly clearly.  Note the defensive sectors (utilities, healthcare, consumer staples) tumbling while cyclicals rally.

Yesterday a number of cyclical sectors such as the industrials broke out past their 2013 highs.  This too is not bearish for the time being, at least not for the medium term, which of course doesn’t preclude any minor setbacks.

The Dow Jones Industrial Average is snuggling up with the 15,000 mark, although already well into all time highs.  It’s previous all time high near 14,200 should act as first support on any pullback.  This index too could have a couple of more percent to rise on pure momentum in the intermediate term.

On the multi-year chart below, looking back to 2011 note that  from November 2011 to May 2012 the stock rallied just about 17 points.  After consolidating for the ensuing six months, the stock then formed a double bottom with its low in November 2012 from which it launched a significant rally.  As of this past Friday May 3rd, American Express Company (AXP) has again rallied 17 points, in other words matching the point streak of the aforementioned  2011 – 2012 rally.

Also important on the longer-term chart is the stock’s breakout past a line of resistance in early January 2013.  The stock eventually retested the breakout area in late January before powering higher into May.  Given this critical breakout, the stock is likely to remain above the breakout area on any potential weakness in coming weeks.

Besides sporting a notably steep slope, the stock is also significantly extended beyond its 200 day simple moving average (red line).  At last Friday’s highs the stock was trading 19% above the moving average, which by historical measures is well extended for the stock.  Last Friday the stock, which had already rallied sharply in recent weeks, gapped up at the open, rallied higher but closed well off the intraday lows.  The daily candle left behind is a so called shooting star candle, which flashes a bearish warning sign.  As a swing trader, for me this now sets the stock up for a good risk/reward trade to the short side.    As long as the stock does not trade above last Friday’s highs near $71.10 (where I am placing my stop) on a daily closing basis, odds now favor the stock to move lower by around 5%.

First up, Hewlett Packard (HPQ) – member of the technology sector.

After a vicious decline off its April 2010 highs, the stock finally found a bouncable bottom in November 2012, from where it proceeded to rally 110% in 4.5 months, topping out on April 1st 2013.  The recent slide off the highs brought the stock below its November 2012 up-trend as well as its 50 day simple moving average.  Additionally, over the past ten trading sessions the stock also developed a so called bear-flag pattern, which as the name suggests, usually resolves to the downside.  A break below $19.50 could get the stock moving toward its 200 day simple moving average around $17.30

Next up, representing the consumer non-cyclical space is Proctor & Gamble (PG).  Since the stock’s post earnings drop on April 24th, it managed to consolidate right above the key diagonal support line near $76.30.   The consolidation form here too is taking the shape of a bear flag formation.  In short, should the stock drop below the diagonal support line, and thus also out of the bear flag formation, the stock will likely accelerate to the downside.

Last but not least, here’s a look at pharmaceutical giant Pfizer Inc. (PFE).  The stock’s November 2012 up-trend remains intact, reinforced by its 50 day simple moving average.  The stock’s steep angle of decline off its April highs increases the odds that the stock eventually slices through this layer of support (around $28.80 – $28.90)  If it does, downside acceleration should increase and the stock could fall at least 5% before next support.