THE BLOG
12/01/2010 03:52 pm ET | Updated May 25, 2011

Technical Dogs and Darlings

Tough talk from Carter B. Worth, one of Wall Street's premier technicians, those folks who seek to determine the course of equity prices by tracking the chart patterns of the various market indices and individual stocks.

It's anything but a happy outlook for investors praying for that traditional year-end Santa Claus rally which will often push up stock prices say 4% to 7%. If you can believe Worth, who views are certainly worth knowing, given what I'm told is an impressive track record of above-average accuracy, Santa could well be a Wall Street no-show this year

"The market is dead here," says Worth, who plies his trade as Oppenheimer' & Co.'s chief technical strategist and expects the market to end 2010 slightly lower than where it is now, say 1,160 in the S&P 500, versus its current 1,200.

Worth, whose research work ignores the fundamental influences that impact the market -- such as jobs, housing trends and the spreading European debt crisis -- has put together a list of 21 stock sells or stinkers, which includes some of the country's most prominent corporate names and by and large predominantly weak stocks that he says are likely to get weaker.

Generally, these stocks are afflicted with any one of a number of technical headaches, as Worth sees them. These include poor relative strength (such as Time Warner, which is underperforming its asset class), stocks that are simply acting poorly (JPM Morgan Chase, Boeing, Electronic Arts and NYSE Euronext), and a crowded trade featuring a stock that has risen too far too fast (Coca-Cola).

Rounding out his dog list are Sears Holdings, Dominion Resources, General Electric, Entergy, Intuit, Intuitive Surgical, Landstar Systems, Lockheed Martin, Medtronic, Merck, Millicom International, National Oilwell Varco, Vertex Pharmaceuticals and Warner Chilcott.

"I'd be short all of them (a bet their prices will fall), and if I was long any of them, I'd get out," Worth tells me.

Even in mediocre markets, there are always certain stocks that will buck the downturn and head higher. In this context, Worth rates a number of stocks as buys. His darlings include Berkshire-Hathaway, Delta Air lines, Autodesk, Express Scripts, Expedia, JetBlue Airways, Pfizer, Kraft Foods, Occidental Petroleum, Norfolk Southern, Procter & Gamble, Xerox, Sara Lee, U.S. Bancorp and Monsanto.

Looking at the various market sectors, Worth's top two stinkers are consumer discretionary and financials; the best, energy and industrials.

Lately, gold, which had been traveling at the speed of a rocket and recently hit an all-time high of $1,425.55 an ounce, weakened somewhat amid a strengthening dollar. Technically, though, Worth sees more shine. "I like gold; I would be a buyer," he says.

It's worth keeping in mind this is all one man's opinion, that some other technicians are more positive on the market. For example, Chris Burba, a technical analyst at Standard & Poor's, sees a 60% chance the S&P 500 will break above 1,200. If it does, he tells me, he would expect a further rise in the index to 1,360, a target that he thinks would take six to nine months to achieve.

Addressing himself to two of the most widely tracked stocks -- Apple and Google -- Burba's latest technical readings suggest Apple, which has been moving sideways since mid-October, is likely to head higher, while Google's chart patterns indicate further downside over the near term.

What do you think? E-mail me at Dandordan@aol.com.