Everything mentioned this week will be short-term sales with the key word being "short-term". A re-test of the lows in the indexes is highly likely to happen this week but will likely be fast and swift. As such, stocks that overextended their rallies this past week are particularly vulnerable to sharp and fast drops. I hope to take advantage of such a drop. Nonetheless, it is likely that within a week or two at most, the market will be heading upward again so shorts will need to be liquidated as soon as their objectives are reached, or a sufficient profit is made.

WDC (Friday close at 17.21)

WDC is a stock that has been building a support base from which to generate a strong short-covering rally in the near future. Nonetheless, the stock has been stuck in a very clearly defined trading range between $12 and $18 for much of the past 5 months. Though the company seems to have higher prices in its future, one more drop in price seems likely to happen, especially if the indexes correct down this week.

Over the past 5 months the stock has been unable to get above the 18.10 level, though it has attempted to do so on 4 previous occasions. Such a clearly evident resistance level is unlikely to get broken unless its fundamentals have changed or it gets help from the indexes. With such a clearly defined risk/reward ratio, WDC seems to be the perfect stock to short this week.

On a weekly closing basis, support is decent at 14.45 and very strong at 13.66. On a daily closing basis, support is basically non-existent until the 14.35-14.68 level is reached. Psychological support should also be expected at the $15 level. On a weekly closing basis, resistance is very strong at 17.91, as that has been the highest weekly close in the last 5 months. On a daily closing basis, resistance is decent to strong at 17.53 and very strong at 17.91. On an intra-day basis, resistance is strong at 17.86 and stronger at 18.10.

WDC has been in a well-defined up-trend since Nov 10th as each correction low has been higher than the previous low (9.48, 10.81, 12.01, and the most recent at 12.64). Even though the stock seems to have built a base from which to launch a strong rally toward $20, one more stab at the downside is probable as the marketplace does not yet seem to be ready to start giving aggressive breakouts.

It is expected that the stock will rally a bit the first part of this week as the indexes will likely move higher as well. Nonetheless, the resistance between 17.80 and 18.10 is very strong and without the indexes getting above their resistance levels, it seems likely that WDC won't be able to do so as well. Drops down to the $15 level or slightly below (as low as 13.82-14.35) are possible and maybe even probable.

This is a stock, though, that if a breakout does occur, a reversal of position can be considered as a break above $18 will likely thrust the stock up to the $20-$21 level in a fast way.

Sales of WDC between 17.50 and 17.80 and placing a stop loss at 18.20 and having an objective of 14.35 will offer a risk/reward ratio of at least 5-1.

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

LEN (Friday close at 8.49)

LEN has been in a very well defined sideways trend since October between $5.50 and $10 and as long as there is an oversupply of homes in the market, it is unlikely the stock will break out of that trading range. Nonetheless, with the recent rally in the indexes the stock has been able to generate a rally and now finds itself getting closer to the higher levels of the trading range. As such, sales of the stock should once again be considered.

Since January's high at 11.56, LEN has been in a slight but consistent downtrend. The stock was able to get down to a January low of 5.42 while re-testing the 18-year lows made in January at 3.42. Nonetheless, the stock has not yet shown enough base building and/or re-tests of the lows to generate the kind of support needed for a concentrated attempt to take out the most recent high at 9.42. As such, if the stock is able to rally the first part of the week to levels where resistance will be encountered, the stock should be sold.

On a weekly closing basis, support is minor at 6.84, strong at 5.87 and major at 3.64. On a daily closing basis, support is minor between 7.29 and 7.69, strong at 6.55 and very strong at 5.87. On a weekly closing basis, resistance is strong at 9.30 and very strong at 9.99. On a daily closing basis, resistance is minor at 8.86, strong at 9.30 and very strong at 10.25 from a previous high daily close as well as from the 200-day MA.

LEN has been on a rally since Monday's low at 5.93 and in conjunction with the index rally. It is likely that if the indexes go higher at the beginning of this week, that the stock will also head higher, perhaps even get above the $9 level. At that level, there are 2 resistances that will kick into place at 9.18 and at 9.42. Nonetheless, with the recent downtrend in the stock, such a rally should be used to short the stock, expecting the recent lows to be re-tested at least one more time.

On the intra-day daily chart, there are several previous lows between 6.09-6.16 that can be used as a probable objective. Nonetheless, on the weekly chart, the possibility of a drop down to 5.62 is good. It is also important to note that the November low at 3.42 has not yet been truly tested and that possibility is still open.

Sales of LEN between 9.17 and 9.40 and using a stop loss at 10.10 and having an objective of 6.16, will offer between a 3-1 and a 4-1 risk/reward ratio, depending on the entry point.

My rating on the trade is a 3.5 (on a scale of 1-5 with the strongest probability rating being 5).

RIMM (Friday close at 40.18)

RIMM has a very sick looking chart but the stock, with Monday's low, was able to build a double bottom on the intra-day chart at 35.09. Nonetheless, on the weekly closing chart, the stock did break the previous low close at 38.82 with a lower close a week ago at 36.64. The close this Friday seems to negate that break but the rally was feeble in nature and the overall chart is still tilted toward further downside.

The rally that was seen this week failed to take out any of the recent highs and the stock is still trading a couple of dollars below the most recent high. It is anticipated that the indexes will rally during the first part of the week. Such a rally will likely that RIMM back up to the recent highs. Nonetheless, if that is all that happens, the chart will still looking heavily tilted toward a re-test of the lows or even further downside.

On a weekly closing basis, support is decent at 36.34 and also at the previous low at 38.82. On a daily closing basis, support is minor at 37.32, a bit stronger at 36.88, and strong at 35.25. On a weekly closing basis, resistance is minor at 42.83, stronger at 44.80 from a previous high weekly close as well as from the 20-week MA, and major up at 59.17. On a daily closing basis, resistance is decent at 41.46 (most recent daily high close as well as several previous low closes), and much stronger between 42.66 and 42.83. On an intra-day basis, though, resistance is strong up at 42.18 (highest intra-day high in 3-weeks).

RIMM has always been considered a volatile and wide ranging stock and for that reason the rally this past week from the low at 35.09 up to 41.59 has to be considered feeble. In addition, none of the close by resistance levels, considered at best, decent, have been taken out. Though the stock was able to negate the break of weekly close support the stock had a week ago, the failure to follow through signal that was generated did not offer a strong retort upward, in spite of the strong rally in the indexes. As such, the stock looks not only like a re-test of the recent lows is forthcoming, but that a new break of support could occur.

It is evident, though, that the 3-week high at 42.18 will be the "key" level to this chart evaluation. If the stock is able to take out that high, it is probable the stock will be heading up toward the $50 level. As such, this is a trade that will either work immediately or get stopped out immediately.

Sales of RIMM between 40.85 and 41.36 and using a stop loss at 42.28 and having an objective of at least 36.66 will offer a risk/reward ratio between 3-1 and 5-1, depending on your entry point.

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

HANS (Friday closing price at 36.99)

HANS is yet another stock that it reaching a level of resistance that is unlikely to get broken this time around. With a very well-defined trading/congestion area seen over the past 11 weeks, if the indexes do has a downside correction, this stock is likely to have one as well, down to the low of the recent trading range.

It is also important to note that HANS has not yet had a good retest of the 20.56 low seen in October. The probabilities of it happening at this time, though, are low (but they do exist) and could turn the trade into a big winner should it happen.

On a weekly closing basis, support is very decent at 33.28 and a bit stronger at 32.01. Below that level decent support is found at 28.60 and strong support at 22.72. On a daily closing basis, support is minor at 35.54 and again at 34.21 from a minor daily close as well as from the 50-day MA. Below that level, support is decent at 33.50 and then nothing until a double bottom is reached down at 31.01. On a weekly closing basis, support is decent at 38.24 and strong up at 9.52 from a previous high weekly close as well as from the psychological $40 level. On a daily closing basis, there is strong resistance at 37.72 and then nothing until 39.63.

The main reason for considering a short position in HANS is the very evident resistance at 37.72 (37.93 on an intra-day basis). The resistance at this level also goes all the way back 3 years and shows the area to be a strong pivot point as well. During this period of time there have been 6 previous lows of consequence between 36.82 and 38.25 and that one previous and recent high at 37.93. Such a long history of this level being an important pivot is likely to influence the action in the stock and with the indexes likely to be heading lower this coming week, the probabilities of the stock heading lower are strong as well. In addition, the 100-day MA is currently at 37.41, making the resistance in that area even stronger.

On the downside, the 32.99 level, and down to 30.37, has been acting as an important pivot point area with both support and resistance highs and lows being seen there. Since August of last year, there have been 3 important highs and 3 important lows all within that range with support seemingly strong between 30.37 and 31.00. The probabilities are high at this time that the stock will continue to trade between $38 and $31 for a week or two more.

Sales of HANS between 37.40 and 37.72 and placing a stop loss at 38.25 and having an objective of 32.10 will offer an 6-1 risk/reward ratio.

My rating on the trade is a 3 (on a scale of 1-5 with the strongest probability rating being 5). The rating would be stronger if the stock was not currently in an up-trend.