Employee8 asked today in the comments section about several charts. I think he may have answered (or the market did) his own question on (MOO: 20.08 0.00%). However, he mentioned that the guys on Fast Money were talking about (CHK: 13.98 0.00%) and (JOYG: 15.21 0.00%), and he wondered what my opinion is about them, especially if the indexes bounce this week.

First, these are not the type of stocks I would buy to take part in any short covering or reflex rally. Actually, what we want to buy are the most beaten down stocks of the Dow Jones, the S&P, and the Nasdaq 100. Pick a few that have been killed over the last three weeks, and buy those. Rob Hanna’s excellent research on his blog Quantifiable Edges confirms this. If you visit his blog, you will have to do a little searching to get to the research mentioned above, but most will probably enjoy whatever else they stumble across there.

I should be clear that I do not like buying stocks in a bear market. Seems rather masochistic. Therefore, it might be instructive to take a longer view of things. The 3 year weekly chart of JOYG is certainly bullish. The stock has created a multi-year cup-like formation. There are negative divergences in the MACD and Stochastics, as they were not able to make a higher high when the stock did. Note that the stock reversed at the previous high, almost to the penny.

The daily chart of JOYG just bothers me. I do not like raggedy, jagged charts. The volatility just kills me, so I stay away from them. However, if one does not mind the swings, it has certainly been a winner. I would wait to see how JOYG reacts to the 50 day average. If that does not hold, watch the 200 day. It is a bear market. It is not like these stocks are just going to run away and you will never get another chance to enter. Patience will pay off. I think JOYG will roll over a bit more. Any change in the coal market fundamentals could cause a severe sell-off. Democrats in the White House?

Now the 3 year weekly of CHK is a beauty. I love it. What a beautiful saucer shaped base. There is really nothing about this chart not to like. However, as I mentioned above, it is a bear market. Let it come in before buying.

The daily chart of CHK shows just how far this stock moved in a short period of time. While the RSI(2) shows it will likely stabilize for a few days, I think it is probable that $41.00 is a magnet. I would want to see how close CHK will get to $41.00 before buying. Then, once it nears $41.00, remind yourself it is a bear market, and re-evaluate, one last time. Actually, since Danny is short CHK, the stock will likely reverse tomorrow, to make new highs.

Note to Employee8: These comments were not really directed at you, or anyone else. I’m just sort of ranting a bit.