Most of the purchase mentions this week will be very short-term trades, as further movement to the upside is expected but likely limited. In addition, it is likely the stock indexes will be trading in a choppy fashion over the next few weeks so all mentions, whether purchases or sales, will probably have short-term lives of 1-3 weeks as well.

LEH (Friday Close at 19.11)

LEH is a stock that has plummeted 76% over the past 12 weeks from a high of 49.88 to last week's low at 12.02. The stock is presently on a short-covering rally that began with a positive earnings report by WFC this past week. It is possible that the financial industry has found a temporary bottom that may stand up for a few months but it is highly unlikely that rallies of consequence will occur due to the overwhelmingly negative fundamentals.

During the past 11 weeks LEH has consistently had lower highs than the previous week but with the close near the high of the week on Friday, it is likely that this coming week the stock will be able to break that trend and have a higher high, at least for one week.

Nearby resistance is almost non-existent but in going back to 1999 (last time the $12 low was seen) rallies above $20 found strong resistance between 21.25 and 21.75. In addition, in 2001 and again in 2002, that same resistance level became strong support. It is therefore probable that on this occasion that same level will once again be strong resistance. Using the 15-minute chart, near-by resistance is found at 22.88. Above that level and using the daily charts, resistance is found at 24.18, at 25.70 and again at 28.21. All of these resistances, though, must be considered minor in nature and breakable if the stock is able to break above 22.88. Using the recent chart support is non-existent, except at last week's low of 12.02. Going back to 1998, support will be found at 15.16 and again in the low $12's.

The fundamental negatives in this industry, and with this stock, are not likely to change any time soon and rallies will continue to meet strong selling until such a time that a chart support base has been built or the fundamentals improve. Nonetheless, the stock is in dire need of at least one corrective week before a re-test of the lows occurs. The most probable week for it to happen is this coming one.

Since there are no major or even strong resistance levels that are recent and near-by, it is likely the traders will use the resistance levels from 1998, when considering where to re-enter the short side. In addition, it is unlikely the stock will venture very far above the psychological resistance at $20 and therefore any incursions above that price will likely meet with strong selling.

Sales of LEH between 21.20 and 21.75 and using a stop loss at 22.98 and having an objective of at least 15.16 will offer a risk/reward ratio of close to 4-1 or better. Primary objective will be 13.20. Risk/reward ratio is this case would be 5-1

My rating on the trade is a 7.5 (on a scale of 1-10 with the strongest probability rating being 10).

GIGM (Friday close at 13.11)

GIGM is a stock that has suffered a 50% drop in price over the past 9 weeks from a high of 19.86 to a recent low 2 weeks ago at 10.16. Nonetheless, upon reaching the $10 level the stock has shown a desire to rally. Over the past two weeks, and in spite of last week's major drop in the indexes, the stock has been moving up in price. With the probability of the indexes holding on to some strength over the next week or two, it likely means the stock will continue to rally until it reaches its upside resistance objectives.

It is important to note that for the last 2 years GIGM has shown a propensity to trade between the $10 and $15 levels. During this period of time the stock traded in that range for about 60% of the time. The rest of the time the stock traded mostly between $15 and $20 with one short period of time where the stock traded as high as $25.

On Thursday GIGM gapped up above the 20-day MA and now seems to be on a rally phase with very little resistance above.

Minor resistance is found at the most recent intra-day high at 13.45. Above that there is no resistance on the daily chart until the 50-day MA at 15.10 level is reached. Nonetheless, the $15 level must be considered strong resistance as over the past 2 years there have been 4 previous daily high closes between 15.02 and 15.16 and 3 daily low closes between 14.78 and 14.88. In addition, on a weekly closing basis, the 200-week MA is currently at 14.75. Above that level, there is another level of resistance just as strong or stronger between 15.70 and 15.93 as the 100-day MA is located at that level as well as 4 previous highs daily closes in that range. Decent support is found between 12.82 and 12.86 (two previous intra-day lows of consequence) and the again at 12.50 (gap area and 20-day MA. Strong support is found at 11.02 intra-day (11.50 on a daily closing basis).

With the gap opening on Thursday at 12.50 and close on Friday near the highs of the week, it seems likely that the stock is on its way up to test the 15.00-15.93 resistance level, perhaps as soon as this week. Nonetheless, this is probably a fast in and out trade as the gap between 12.10 and 12.50 will likely be filled at some point in time.

Purchases of GIGM between 12.82 and 12.96 and placing a stop loss at 12.40 and having an objective of a minimum of 15.16 will offer a risk/reward ratio of 5-1.

My rating on the trade is a 6.5 (on a scale of 1-10 with the strongest probability rating being 10).

JBL (Friday close at 15.99)

JBL is a stock that has been in a downtrend for 2 years with a drop from a high of 43.70 in Mar06 to a 10-year low of 9.03 in Mar08. In the process of that downtrend, the stock broke a major 5-year support level at $20 as well as the previous 10-year low weekly close at 12.33. JBL has now negated the break of the 12.33 support level and now seems to be in the process of going up to test the previous major support at $20.

During the last 4 months JBL has been in a clearly defined up-trend on the daily charts and just 3 weeks ago the stock gapped up above the 200-day MA and has been able to maintain itself above that line ever since. The stock has managed to maintain the up-trend during this period of time in spite of the recent sharp downtrend in the indexes and now that the indexes seem to be in a corrective phase, JBL seems poised for further upside.

Resistance is strong up at 16.48-16.57, as there have been 3 daily closes at that price recently. Above that level there is a double top at 18.42 on the daily closing chart that also looms strong but on the weekly chart looks minor. On the weekly chart as well, there is decent resistance at 16.29 (recent weekly high close) and at 16.10 (50-week MA). Nonetheless, should the stock close above 16.29, on a weekly closing basis, there is no resistance until the psychological resistance level at $20 as well as the previous weekly low closes at 19.58 and 20.56 are reached. Support is very strong at 14.90-14.95, as there are two previous daily closes at that price as well as the 200-day MA. Below that there is strong support from a double bottom on the intra-day chart at 13.90.

As soon as JBL broke above the 200-day MA it became more volatile and increased its daily trading ranges. By the same token the stock has been successful in building a strong support base above $15 from which to launch an attempt at the $20 level. The stock closed on Friday right below the resistance at 16.00-16.50 but seems to be poised to continue higher this coming week and generate a breakout. With the indexes likely to hold on to last week's strength and go higher, it is highly probable that JBL will break above resistance and generate a fast 1-2 week rally up to the $20 level.

Entry into this stock is tricky, though, as there are a couple of scenarios that could occur. The perfect scenario would be a drop down near $15 and a purchase there with a stop loss at 13.80. Nonetheless, the probabilities of this occurring are very low. The next scenario would be to wait for the breakout to occur and purchase the stock on the breakout. Nonetheless, this is the least attractive scenario as the general market is not conducive to chasing stocks on the buy side. The last scenario and the one that I will be taking, is to assume the breakout will occur and use Friday's low as support and stop loss point.

Purchases of JBL between 15.82 and 16.02 and using a stop loss at 15.37 and having an objective of 19.58 will offer a risk/reward ratio of 6-1 or better.

My rating on the trade is an 8 (on a scale of 1-10 with the strongest probability rating being 10).

IR (Friday closing price 36.00)

IR is a stock that 2 weeks ago broke below a 36-month weekly closing low of importance at 35.80 with a close at 34.73 but failed to confirm the break by closing Friday above the previous low weekly close. In addition, the stock is very oversold and in dire need of a corrective phase. With the possible failure-to-follow-through signal the stock might be giving as well as the probability of an index rally this week, it seems highly probable the stock could be in a correction phase upwards.

Since Nov04, IR has traded 50% of the time between a low of 35.80 and a high of 41.60 and with Friday's close at 36.00 (above the previous low close) it seems likely the stock will get into that trading range for the next couple of weeks.

Minor resistance at the recent daily high close and 20-day MA at 36.85. Minor resistance again up at 38.19, which was the intra-week high two weeks ago. Stronger resistance is found up at 39.72 from several previous daily high closes at that price as well as the psychological resistance up at $40. Strong resistance as well is found up between 40.72 and 41.60 on both the daily and weekly charts. Support is very decent down at 35.60 from several previous intra-day and intra-week lows at that price. On the daily closing chart, major support is once again found at 35.80 since that was the previous daily and weekly closing low.

IR seems to be in a corrective phase to the recent downtrend but when added to the failure-to-follow-through signal the stock may be in the process of confirming as well as some rally strength expected in the indexes, it is likely that for the next week or two the stock will be rallying up to the resistance levels above.

Purchases of IR between 35.60 and 35.80 and using a stop loss of 35.42, on a stop close only basis, and having an objective of a rally up to at least 39.72 (if not the high $40's) will offer a risk/reward ratio of 8-1.

My rating on the trade is a 7 (on a scale of 1-10 with the strongest probability rating being 10).