Palm’s latest product, the Pre is their latest Hail Mary play. Their well received smart phone is not likely to put a significant dent on the more established players such as Apple and Research In Motion. Unlike their competitors, Palm has to contend with weak finances. While Palm is putting all their eggs in one basket, their stronger rivals have several products from which to attract new and current customers. The stock is trending down and is struggling to trade above its 50 day moving average. Key support for Palm is at $12. To confirm its upward momentum, Palm needs to break its 52 week high of $16.80. Given its questionable fundamentals, this is a stock to sell on strength. Too much hope on the company’s fortunes are placed on one product.       

As more evidence points to an economic recovery, investors are shifting from defensive stocks to cyclical stocks. As a result, MCD did not participate in the recent summer rallies. Never the less, MCD still remains a well run, financially strong company with very high consumer recognition. MCD is struggling to stay above its 200 day moving average or $57. The long term trend is towards the downside. Major support for the stock is at $50. At this level, it becomes a buy. Along with its reasonable P/E multiples, the stock has an attractive dividend yield of 3.50%.

Everything seems to be going well for this diversified industrial company. The charts for UTX indicates blue skies ahead. The stock is clearly in an uptrend. It has been trading above its 10 day moving average. Major support lies at the 50 day moving average or $54. The 200 day moving average lies around the $50 area. Key to determining the direction of the stock is whether it can stay above $60, which is a major resistance level. IF UTX is successful in doing so, the stock is poised to retest its 52 week high of $67.95. If $60 cannot be breached, the stock will probably consolidate its gains and trade in a range of $54 to $60.

Despite strong economic data that sparked healthy buying of stocks, the equity markets are struggling to hold on to their highs of the days. For the bears, this suggests that all buyers have been taken out and that stocks are vulnerable to the downside. Never the less, equities are holding up quite well given their recent run up. Looking at the S&P 500, it is finding resistance around 1037 after surging from 980. If the previous resistance level of 1020 acts as the new support level, the upward bias for stocks will continue. Currently, equities seem to be lacking any conviction either on the upside or downside. A positive for stock market bulls is that sentiment for September and October are negative due to seasonal factors. If the markets continue to gain, the bears could be forced to cover their trades.    

If one pays attention to the supply data on US crude, they will see that inventories are at 5 year highs. The recession has lowered the demand for energy, whether it’s jet fuel or heating oil. Based on fundamentals, one can argue that oil should be trading in the $50 dollar range, and not around $75. Instead, the price movement of crude has been linked to the stock markets and investors looking to diversify from a weakening US dollar. If the greenback does stabilize, it is likely that oil will trade more on fundamentals. Crude is being pulled between hopes of an impending economic recovery and abundant supplies of crude. The expected trading range is between $60 to $80.  

The biggest story in this big stock market rally is how the junk are being snapped up in a big way. It seems that investors are looking for large beta stocks to trade in order to make up for the terrible losses seen in 2008. Looking at AMD, this chip maker took a massive beating by a re-awakened Intel. The 52 week trading range for AMD is $1.62 to $6.47. The stock is up close to 10% this morning, currently trading at $4.06 on an analyst upgrade. AMD is trading above its 200 day moving average and today just broked the 20 day moving average. If this previous resistance levels acts as the new support, AMD could pop back up to the $4.80 level. Longer term, AMD still faces many challenges including a weak market for chips and its huge debts. This is a stock to trade and is not to be bought and hold. 

There is just no keeping the equity markets down. Whether it’s good news or bad news on the economy, stock prices are being bidded up. After correcting back down to 980, the S&P 500 has now surged above 1020. Investors will want to see how the markets will close at the end of the week. For the bulls, they want to see the widely followed index close near its highs and support being confirmed at the 10 day moving average. Given the light trading volumes typical in the summer, it won’t take much to push the S&p 500 towards 1100. 980, 970 and 950 are key support levels.

The weakest of the bunch, shares of Citigroup are testing the 200 day moving average. This financial institution is facing plenty of headwinds.They include toxic loans on their books, massive equity dilution, government meddling and the difficulty of attracting talented people to work for them. Never the less, a rising tide will raise all boats. As a result, C is testing major resistance at the 200 day moving average or around $4.50. If this level is broken and acts as the new support level, the stock could test the $8 to $9 area. Since the end of July, the stock has been trading above its 10 day moving average. A break of this moving average means it could test the 50 day moving average at $3.25.

The environment for natural gas bulls has been more more like a killing field. The reason why investors became bullish on natural gas is that it was perceived as a bargain relative to oil. The oil to gas ratio was traditionally 8:1 and has ballooned to around 20. The price for this commodity has been pulled down by supply and demand factors. A weak economy translate to lower demand. Increased supplies came from uncoventional shale gas sources and reluctance by companies to cut back production despite low prices. Inventory is at historical highs. Many analysts believe that this commodity will bottom out somewhere below $3, even as low as $2. Only when we see investors throw in the towel on being long natural gas will we see a bottom. We are not there yet. Capitulation needs to take place first.

According to a recent report issued by RBC, the big 3 winners in the exploding smart phone market are Apple, Research In Motion and Palm. More consumers are using these devices for e-mails, Internet access and phone calls, replacing the computer and the traditional cell phone. The new price target for PALM has been increased from $18 to $25. The stock is up 5% to $13.82. Looking at the charts, the stock faces resistance at the 50 day moving average or $14.61. Support lies in the low $13 area. For the stock to confirm its upward bias, PALM needs to break its 52 weak high of $16.80. Compared to Apple and RIM, it is the weakest of the three.