A new week and a big week...

This week we have numerous companies reporting earnings. This week will be driven by earnings and forward guidance expectations that the companies tell the market.

This morning we already have earnings from Merch & Schering-Plough. Both released good numbers and we will see a boost in the drug manufacturers sector today. Some of the big companies (or ones that will be watched closely) reporting this week are AXP, STLD, TXN, T, CFC, DD, LLY, JBLU, KMB, LMT, MCD, NOC, ROH, UPS, AMZN, BA, COP, GLW, HMC, BUD, AAPL, ESRX, BMY, DOW, XOM, F, ICE, DECK, ESLR, MCK, BHI, CVX. This list is of course only a small sampling of the companies reporting this week, but these companies I list here are ones that will have an impact on the market and/or sector they are in.

Early this morning RIG & GSF announced that they will merge. The off shore oil drillers should move in sympathy today. Over the weekend Investors Business Daily provided a boost to the RebelTrader play on GRP. GRP is still a good swing trade and I'm looking for some good moves in the coming days.

RebelTrader play BIG is getting old. If there is not a bounce in the retail sector soon I may close out BIG because it has been stalled too long. And stalled money makes no money. So we need to move it along. Does no good to have it sit in a sector that is flat lined at the moment. This week will determine the course of action for BIG.

I have a new watch list coming with many new stocks to watch. I want to present you with one here this morning. This one stood out because it shows a divergence of price vs technical indicators. A divergence is a powerful leading indication of what is to come. When you look at a stock chart and see the price dropping but technical indicators are going the other way that is a 'divergence'. And it can signal a pending change in the works. Acme Packet (APKT) is one of those types of charts. APKT went public last year and like many IPO's they sell off to the level that the 'market' thinks they are worth. And in many cases the sell off is over done and it results in a period of settlement. In the settlement period the sellers and buyers reach an agreement on what the price should be. On the APKT chart you will see 3 point where the price hit a point and each time buyers would not allow it to go any lower. This happened 3 times at the same price point. This is significant in itself. But more important is the divergence in the technical indicators. Examine the MACD, RSI, and the CMF. Notice how they have been trending upward while the price was working downward. What this shows is that the market is starting to change it's mind on APKT (in the case of the CMF indicator, even before the bottom was reached). When ever you come to a chart where you see a divergence of price vs indicators take notice! Something is in the making.

On the APKT chart you will see a white line plotted on the chart with the price. That is the "On Balance Volume [OBV]" The OBV is an indication of volume flowing in or out of a stock based on volume and price advance or decline. When you see OBV diverge away from the stock price it shows a change in the stock price will follow in time. As one of the technical analysis instructors pointed out a person can think of the OBV as a magnet. The stock price will generally be attracted to move in the direction of the OBV.

How would I play APKT. I drew two green lines on the chart. I will enter a 1/2 position on the move over the first line. Then the stock may accumulate a bit then when it moves over the second green line I will enter the remaining 1/2. APKT has a low short interest of about 9%. Which is an indication that most short sellers have cashed out because they see the same technical indicators that I am seeing. The chances of the stock going up is much greater than it going down any more.

Futures are up at the moment. Get set for a big week with lots of news crossing the wires as companies release earnings.