It is likely that the indexes have reached levels where further upside is extremely unlikely unless they are in a runaway bull market (unlikely). On Friday, all indexes reached the maximum possible within a non-bull market scenario. As such, all mentions this week will be sales. Stocks mentioned still have close-by resistance levels that can still be used as stop loss points, therefore limiting risk just in case indexes keep heading higher.

CALM (Friday Closing Price - 30.17)

CALM has rallied over the past 4 months from a low of 20.08 to last week's high at 31.68. Nonetheless, this is a stock that since 2007 has traded a large portion of the time between $20 and $30 and in a sideways pattern. Being a food producer of eggs, the company is in an industry that is somewhat resilient from recessions as well as from great appreciation in price due to a bull market. Having reached what is considered to be a strong resistance level, the probabilities of downside action from here has increased.

CALM had an inside week this past week (higher lows and lower highs) thus failing to follow through on the previous week which had generated a strong up rally. The inside week, as well as the very small trading range (stock usually trades in $6-$7 weekly trading ranges) is indicative that the $30 level is seen as strong resistance.

On a weekly closing basis, resistance is decent at the psychological level of $30. Above that level there is no weekly close resistance until 34.50 is reached. On a daily closing basis, resistance is strong from 2 previous important daily closes at 30.28 and 30.43. On a weekly closing basis, support is minor at 29.43 and decent to strong between 27.46 and 27.75 from 3 previous high daily closes at that price. Below that level, support is decent to strong between 24.32 and 24.86. On a daily closing basis, support is strong at 27.29 and then nothing until the 200-day MA is reached at 25.33.

CALM shows very strong resistance at $30 and with the probabilities of the indexes having found their temporary top, it is likely the stock will be heading lower. With the stock having traded between $20 and $30 for over 60% of the time during the last 3 years, the probabilities favor that trend continuing. Nonetheless, it must be stated that the stock is showing an inverted Head & Shoulders formation with the left shoulder at 21.08, the head at 17.01 and the right shoulder at 20.08. The necklines are at 30.99 and 31.68 (30.28 and 30.43 on a weekly closing basis). This means that if the stock is able to close above 30.43 on a Friday, the objective would be a rally up to the $43 level. As such, this trade could be seen as a possible two-way trade.

Nonetheless, with the stock at strong resistance, the short side at this time is the most attractive because the risk factor is clearly defined and small and the profit potential is attractive. It must be stated that one of the reasons the stock has been rallying is that a major weekly gap exists between 32.33 and 36.75 which is one of the reasons the stock was able to get up to 31.68 last week. It is evident that with the strong market, the traders have been trying to get up to the gap with the intent of trying to close it. It must be noted, though, that the rally up to 31.68 happened 2 weeks ago and the stock has since been unable to get close to that high. If not able to do so this week, and the indexes drop, the bulls are likely to give up trying and concentrate on the sideways trading range between $20 and $30.

Sales of CALM between 30.55 and 30.99 and using a stop loss at 31.78 and having an objective of a drop down to 25.33 will offer a risk/reward ratio of at least 4-1.

My rating on the trade is a 3 (on a scale of 1-5 with 5 being the highest probability).

RHT (Friday's closing price - 21.84)

RHT seems to have reached its short-term top when it rallied 3 weeks ago up to the 23.72 level. Since 2006, the 22.68 up to 25.25 has been strong resistance and able to stop any strong rallies. With the fact the stock has been unable to move higher during the last 2 weeks, when the indexes have continued to make new highs, seems to suggest that further upside is unlikely.

On July 17th RHT replaced CIT in the SPX and the announcement generated a gap opening, a break above the 200-day MA, and a rally from 20.98 up to the high at 23.72. Nonetheless, a few days later Jefferies & Co. downgraded the stock, thus stalling the euphoria of the event.

On a weekly closing basis, resistance is decent at 22.88 and very strong between 24.00 and 24.57. On a daily closing basis, resistance is minor at 22.83 and very strong between 23.00 and 23.24. Above that level, major resistance is found at 24.36. On a weekly closing basis, there is decent support at 21.00 from the 200-day MA. Below that level support is decent to strong at 17.06, and very strong at 15.63. On a daily closing basis, support is decent to strong at 20.79 from the 50-day MA, as well as from two important previous daily high closes. Below that level there is no support of consequence until the 100-day MA, as well as several previous and important daily closes are reached between 19.05 and 19.29.

It is evident that RHT moved up recently because of the inclusion into the SPX. Nonetheless, there wasn't very much follow through to that announcement in spite of the rally in the indexes, and the stock has settled back after being unable to break any previous resistance level of consequence. As such, if it likely that with or without the help of the indexes, RHT could be heading lower.

During the last 11 trading days RHT has been fading downward and now the stock seems ready to close the gap and breakout level at 20.99. In addition, there is no strong support at that price increasing the probabilities of a retest of the $20 level sometime soon. Should the gap be closed and the indexes begin some form of correction, albeit a shallow one, it is likely that the stock will head down to the 100-day MA currently at 19.33.

Sales of RHT at 22.88 or better and using a stop loss at 23.82 and having a minimum objective of 19.33 offers a wisk/reward ratio close to 4-1.

My rating on the trade is a 3 (on a scale of 1-5 with 5 being the highest probability).

RIMM (Friday's closing price - 77.09)

RIMM seemed to have generated a break of resistance last week when the stock broke above the previous intra-day high at 78.20 and rallied up to the psychological resistance level at $80. Nonetheless, when the week was over the stock had not only reversed the break on the daily chart but was unable to generate a weekly close that confirmed the break, in spite of the fact the indexes rallied and closed on new 10-month highs.

With the failure, but with the good retest of the $80 psychological level, RIMM might have accomplished all the upside action on the chart that is required after the major March breakout out above $57.

On a weekly closing basis, resistance is strong at 83.02. On a daily closing basis, resistance is decent to strong at 79.80 from the high daily close made this week. On a weekly closing basis, there is minor support at 72.03 and again at 69.00. Strong support is down 66.63. On a daily closing basis, support is decent at 75.58, minor at 73.50, and decent to strong between 68.11 and 69.06 (two previous closes at those levels as well as from the 100-day MA). Below that level there is strong support between 65.62 and 66.18 and then nothing until the 200-day MA is reached at 56.50.

RIMM showed unexpected weakness this past week after having been able to get above a very strong intra-day resistance at 78.20 as well as a daily closing resistance at 77.54. With the close below that level on Thursday, and confirmation of the failure on Friday, it is now likely that further upside of consequence will be extremely difficult to achieve. In must also be mentioned that the previous weekly close of importance at 76.84 has been broken but not by a sufficient amount (25 points) where it can be said the resistance is no longer of concern.

With the high probability that the indexes have reached the maximum upside, unless the indexes are in a runaway bull trend, it is likely that all stocks will be seeing some selling coming in this week. Having established the fact that the $80 level is a strong psychological resistance, it is likely that RIMM will be heading lower. It is also important to note that the 50 and 200 week MA's are crossing this week at the $60 level, as such, the possibility of a drop down to that level exists.

Should the stock break below the 50-day MA, currently at 74.80, drops down to the 100-day MA, currently at 69.35 are highly probable. The support at that level is strong so at this time that level will be used as the objective. Nonetheless, if the indexes do get into a strong correction, drops down to test the March breakout level at $57 could occur.

Sales of RIMM between 78.15 and 78.65 and using a stop loss at 80.69 and having an objective of 69.33 will offer almost a 4-1 risk/reward ratio.

My rating on the trade is a 3 (on a scale of 1-5 with 5 being the highest probability).

DIOD (Friday's closing price - 19.75)

DIOD has moved up from a November low of 2.95 up to last week's high of 20.20 without any kind of correction of consequence. At $20, though, the stock finds itself at a major psychological resistance as well as at the 100-week MA, making that level into an area that is likely to be difficult to break.

The volume of trades in DIOD over the past 7 weeks has dropped to the lowest level since 2004 and it seems likely that the recent rally from the $15 - $20 level was due to a short-squeeze. This is especially likely since it is evident with the drop from a high of $30 in June08 to the $2.95 low seen in November that this stock was a favorite among the short sellers. With the drop in volume seen over the last few weeks, it is probable the short interest has waned as well as the new buying.

On a weekly closing basis, resistance is decent at 20.20 (last week's high) from a previous major weekly low close at 20.22. In addition, the 100-week MA is currently at Friday's closing price of 19.75. On a daily closing basis, resistance is minor to decent at a September 2008 high daily close at 21.15. Above that level there is no resistance until 24.00 to 24.59 is reached. On a weekly closing basis, support is minor to decent between 18.39 and 18.49 and then nothing until minor to decent again at 15.37. Stronger support will be found at 11.37 from an important weekly low close as well as from the 50-week MA. On a daily closing basis, support is minor to decent at 18.56 and again at 18.02. Below that level there is no support until 15.11 is reached. At that level, the 200-day MA is also currently found. Strong support is found at 11.81.

DIOD has seen a miraculous recovery over the past 8 months after having dropped down to 2.95 from a previous all-time high at 35.00. The rally, though, has been almost straight up with only one small correction along the way in May from 16.90 down to 11.50. In looking at the longer-term chart, the $20 level seems to be a major pivot point as it was the low seen from Dec05 until it was broken on Sep08. Such a long-term support must be considered strong resistance, especially with such a short-term overbought stock. Add to that the fact that the 100-week MA was reached this past week and that the indexes have likely reached their upside objectives, at least for the next 2 months, it seems likely that the stock will be heading lower from here.

With only minor to decent support near-by, it seems probable that drops down to the next psychological support at $15 will occur. If the indexes get into a stronger correction, it will become likely that the low of the only corrective phase on the way up at 11.50 could be tested.

Sales of DIOD at Friday's closing price of 19.75 and using a stop close only stop loss at 20.40 and having an objective of 15.10 will offer a risk/reward ratio of 7-1.

My rating on the trade is a 4 (on a scale of 1-5 with 5 being the highest probability).