Now that the anticipation of the Tax Reform bill is becoming a reality the reaction after the bill is passed may not be further upside (other than a first initial rush) as further upside will likely require tangible and not speculative results. The likelihood of the market returning to trading chart support and resistance levels and experiencing peaks and valleys will increase exponentially, meaning that the uptrend will begin to look different than what has been seen this year.

With that thought in mind, I looked at over 80 stocks last week trying to find some trades that could be done. By the same token, December is not likely to be a big month on either side of the coin (buying or selling) and as such, my search was more for stocks that had a clear short-term chart objectives as well as support levels that could be depended on to be traded in a low volatility environment. Simply stated, stocks that were not likely to make any long term statements.

I found 2 stocks that fulfilled those guidelines for a trade and gave them as buy mentions last week but the stocks did not get down to the desired entry points and the buy positions were not instituted. Nonetheless, they remain buy mentions this week.

Additionally, I have enclosed 1 sell mention for this week. The sell mention does not have a high probability rating given that the Tax Reform bill is likely to pass and likely to give all stocks a boost up. Nonetheless, Tech stocks have been under some sell pressure under this Tax bill and this stock has the kind of a chart that leans toward a sell even if the overall market goes up.

PURCHASES

WDC Friday Closing Price 81.47

WDC broke above the 200-week MA in January, currently at 78.30, and has been trading above the line since then. The uptrend at that time kept the stock heading higher but on a backing and filling basis until the high at 95.77 was reached in July. Since then, the stock has been on a short-term downtrend and 3 weeks ago it got back down to the MA, seemingly fulfilling the immediate downside objective of the short-term downtrend.

WDC generated a rally last week, likely based on the successful retest of the weekly MA line and did get close to the 200-day MA, currently at 86.25, with a rally up to 85.63. Nonetheless, the bulls were not able to get above the line and the stock sold off to close near the lows of the week, suggesting further downside below last week's low at 79.93 will be seen this week.

WDC had gapped down on November 27th due to a downgrade from overweight to equal weight by Morgan Stanley, which in effect caused the stock to drop down to the 200-week MA, but the downgrade simply stated that further upside was unlikely to be seen, not that the stock was a sell. As such and with the positive reversal seen last week, it is highly likely that the traders will look to close the gap between 92.25 and 88.33 and keep the stock in a sideways trading range that has been seen over the past 8-months (between $77 and $92), especially for the next few weeks during Xmas until the index traders face some new decisions to be made in January.

WDC gapped up a week ago Friday between 78.86 and 79.42 and there was no news catalyst for the gap. With the stock closing near the lows of the week on Friday, probababilities are high that closure of this gap will be the objective this week. As such, that chart objective will open the door for a purchase of the stock.

To the downside and on an intraweek basis, WDC shows important and pivotal support at the recent 76.59 low. Nonetheless, there is a spike low at 78.31 that was seen in August that should work as support now, especially considering that a drop down to that level would close the gap that was seen on Friday.

To the upside and on an intraweek basis, WDC shows minor resistance at 84.47, minor to perhaps decent at last week's high at 85.63 and minor again at 85.94 that is further strengthened by the 200-day MA, currently at 86.25, that was broken 2 days after the downgrade by MS came out. That line will be an obstacle to overcome and as such will be considered a viable and highly likely to be reached objective. Above that level, there is minor to decent resistance at 88.00 and decent between 92.13 and 92.50, which would close the gap that occurred on November 27th.

WDC now shows a successful retest of the 200 week MA to the downside and a successful retest of the 200-day MA to the upside, suggesting that whichever line gets broken convincingly will generate further action in that direction. A break and a confirmed close above 86.25 should generate enough interest to push the stock up to close the gap at 92.25. A break below the most recent low at 76.59 in conjunction with a confirmed close below the 200-week MA, currently at 78.40, should push the stock down to at least 71.39 but with a decent possibility of a drop down to the $50 level over the next few months. As such, this is a trade that can be considered both as a purchase at the desired entry point and a sell if the recent low is broken.

Purchases of WDC at 78.87 (or lower) and using a stop loss at 76.49 and having a minimum objective of 86.25 will offer a 5-1 risk/reward ratio with a decent possibility of the stock continuing higher to 92.25, which in turn would make the risk/reward ratio a high 9.7-1. The stop loss could be a double one, meaning that if hit, the long positions would be liquidated and new short positions instituted using a stop loss at 81.76.

My rating on the purchase trade is now 3.5 (was 4 last week), on a scale of 1-5 with 5 being the highest, given that last week's rally to 85.63 can be considered a retesting the 200-day MA, meaning that high probability event has now occurred.

RECN Friday Closing Price - 15.50

RECN was in a 5-year uptrend from the low seen in November 2011 at 8.26 to the high seen last December at 19.80. Nonetheless and likely from negative earnings reports (speculating but did not check), the stock got into a mid-term downtrend that ended in September with a low of 12.05. The downtrend did break the long term uptrend, meaning that at this time the stock is likely in a sideways trend.

RECN generated a strong rally/recovery after the 12.05 low was made, given that it rallied up to 15.90 in just 5 weeks (33% in value) and in the process got above the 200-week MA, currently at 15.25, which a line that has been proven to be relatively (not fully) indicative over the years the stock has been trading.

The rally continued after a small 2 week pause at the MA line with further upside and a 16.80 high that was seen 3 weeks ago. Nonetheless, 2 weeks ago the bulls were unable to generate any further upside after the company announced that the acquisition of Accretive Solutions Inc. had been finalized/fulfilled totally, suggesting that the anticipatory benefits of that acquisition were over and that the traders would return to chart trading.

RECN generated a positive reversal week last week, having made a new 8-week low and then closing in the green and in the upper half of the week's trading range, suggesting further upside above last week's high at 15.70 will be seen this week. The stock is presently showing a bullish flag formation with the flagpole being the 13-week rally from 12.05 to 16.80 and the flag the trading range seen the past 8 weeks between 14.65 and 16.80.

RECN did get down to the top of the desired entry point between 14.70 and 15.30 with a drop down to 15.15 but since the stock was not purchased, a new entry point will need to be chosen for this week. With the 200-week MA, currently 15.25, reached and a positive reversal occurring, the probability rating has risen though a higher entry point is now required. The objective of the flag formation if the top of the flag at 16.80 is broken is 19.40. In looking at the weekly chart for the past 3 years, it suggests that the spike highs at 18.54 and at 18.71, seen in Feb2015 and Nov2015 are viable and likely objectives for the stock.

Purchases of RECN between 15.25 and 15.30 and using a stop loss at 14.55 and having an upside objective of at least 18.54 will offer at least a 4-1 risk/reward ratio.

My rating on the trade is a 4 (was 3.75 last week), on a scale of 1-5 with 5 being the highest.

SALES

NFLX Friday Closing Price - 190.12

NFLX made a new all-time high 10 weeks ago at 204.38 but in spite of the index market continuing to make new all-time highs consistently (including the NASDAQ) the stock has shown short-term weakness, having corrected 12.8% over this period of time.

NFLX got down to 178.38 2 weeks ago but then generated a positive reversal week that saw follow through last week (both on an intra-week and weekly closing basis) and a close near the highs of the week, suggesting further upside above last week's high at 192.64 will be seen this week. Nonetheless, the stock remains 7% below its all-time high and with the indexes likely move higher but on a limited basis, it seems unlikely that the bulls can push the stock to new all-time highs, suggesting that this rally will likely turn out to be a major retest of the all-time highs before a stronger correction begins.

To the upside and on an intraweek basis, NFLX shows minor resistance at 196.05, stronger at 197.70 and minor to decent and likely pivotal at 199.68.

To the downside and on an intraweek basis, NFLX shows very minor support at 184.82, minor at 184.32 and then nothing until minor to decent as well as short-term pivotal at 178.38. Below that level, there is minor to perhaps decent support at 176.55 and then nothing until the 200-week MA, currently at 169.75.

NFLX already shows 2 successful retests of the all-time high on the daily chart (202.48 and 199.68) and 1 successful retest on the weekly chart (199.68), suggesting that the bulls will need either strong positive news or a major continuation of the uptrend in the index market to overcome those negatives. As such and with the Tech Industry not being one of the major recipients of benefits from the Tax Reform bill, it is one of the best charts at the moment for a sale position.

Sales of NFLX between 194.10 (50-week MA) and 197.70 (decent resistance) and using a stop loss at 200.35 and having a downside objective of 169.75 (200-week MA) will offer a 4-1 risk/reward ratio.

My rating on the trade is a 3.25 (on a scale of 1-5 with 5 being the highest). Nonetheless, the rating would be 3.75 if the Tax Reform bill was not such a big monkey wrench.