(MSFT) - (ORCL) - (TWX) - Dr. Melvin Pasternak, the StreetAuthority Swing Trader newsletter

Dr. Melvin Pasternak, editor of the StreetAuthority Swing Trader newsletter, offers his technical analysis of the S&P 500. Read this featured expert’s commentary and learn about the different economic indicators referenced by Dr. Pasternak. Afterward, take a look at some of the doctor’s stock profiles. The Primary Trend from December 18 Yet another stair has been added to the "stair step" advance of the S&P 500. On December 7th, the S&P hit a high of 1418.27 and then quickly backed off round-number resistance just shy of 1420. Over the next four trading days, the index retreated each time it tested that level. Last Thursday, however, corporate-friendly news gave the index the momentum needed to overcome the 1420 barrier. On Friday, the S&P ratcheted up to the next 10-point stair, hitting an intraday high of 1431.63 before retreating. Blowout earnings this past week from investment bankers Goldman Sachs (GS), Bear Stearns (BSC) and Lehman Brothers (LEH) helped set a bullish tone, which was reinforced by another batch of positive economic data. At its Tuesday meeting, the Fed reaffirmed that "readings on core inflation have been elevated" and warned that high levels of resource utilization have "the potential to sustain inflation pressures." On Friday, however, the latest inflation numbers proved benign, as the closely-watched Consumer Price Index (CPI) came in flat for November. At the same time, industrial production staged a modest recovery, ticking up 0.2% for the month. Those figures, coupled with a better than expected read on retail sales, suggested that the Fed's goal of steering the economy into a "soft landing" remains on track. For the week, the S&P gained a bit more than 15 points, closing just 4 points off its highs. While the rally was modest, it was enough to keep the index above the key Intermediate trendline drawn from the July low. That trendline currently intersects the chart at approximately 1398. The S&P continues to trade above all key moving averages. Most of these are sloping moderately higher, but the 10-week at 1389 is slanting sharply upward, reflecting the powerful Intermediate-term advance that is now close to six months old. Current resistance is at 1441, the level of the upper Bollinger band. This band has provided resistance throughout the uptrend, with the S&P escaping its confines only in September and October -- and even then briefly. The band is rising in conjunction with the 20-week moving average around which it is calculated. Over time, that means resistance will climb progressively higher. The Major bull market trendline drawn from the July 2004 low now crosses the chart near 1266, so a near-term test is almost inconceivable. The weekly indicators have been overbought since August, but the S&P has still advanced more than 120 points since that time. ADX and MACD remain on strong buy signals. RSI, after giving a weak sell signal, has climbed back above the key 70 level to finish the week at 74. After hugging the key 100 level the past several weeks, CCI has now bounced higher, closing at +122. Stochastics has been highly overbought for nearly five months and remains so now, with %K at 93 and %D also at 93. Both components of this indicator would have to slip below 80 to generate a sell signal. That is certainly improbable before the beginning of 2007. Short-term Trading Ideas include… Long Candidates: Microsoft (MSFT): Dr. Pasternak highlighted Microsoft in the November 13th newsletter at $29.24. On Thursday, the shares finally traded through the $30 level for the first time since 2002! MSFT has also created a base of $6, which projects a target in the low $30's Oracle (ORCL): After gapping nearly $2 higher when the company reported quarterly earnings, ORCL has since consolidated between the low-$17 and high-$19 range. Time Warner (TWX): Dr. Pasternak flagged TWX in the November 20th newsletter at $20.43. The stock has recently begun to trend higher after a prolonged trading range, and has bulled its way through $20 for the first time since 2004. Thus far, the shares have held that support. This article highlights the commentary of Dr. Melvin Pasternak for the Zacks.com audience. Dr. Melvin Pasternak provides insightful analysis, market commentary, and favorite recommendations on a timely basis in "StreetAuthority Swing Trader" newsletter. Try it free for 30 days and see if you can improve your investment performance. Learn more about "StreetAuthority Swing Trader" and 30-Day Free Trial. And get immediate access to current issues and special reports. Click here now. Here’s How You Can Profit from the Pros Find out what other leading experts are saying about the market. And what stocks they are recommending. For free. Just sign up for our free email newsletter, Profit from the Pros, where we’ll give you the commentary, advice, and insight from those rare few experts who consistently beat the market year in, year out. | Blog Home| VitalStocks Home