The “January Effect” -- the tendency of the market to rally from Dec. 31 till the end of the first week of January -- has come and gone. Now, with the S&P down more than 7% since last Monday, it’s time to turn to the charts to find the profitable plays. And that’s something RealMoney.com’s Dan Fitzpatrick is an expert at.

Let's take a look at Fitzpatrick’s "3 Stocks I Saw on TV" video series and see what he's had to say lately about stock ideas he's found on TheStreet.com, “Fast Money” and “Mad Money."

TheStreet.com’s Most Popular: General Electric, Wal-Mart and
Caterpillar: Jan 12

General Electric (GE): “I’m not really getting why everyone’s so interested in this stock,” admitted Fitzpatrick in his Monday video. “It looks a lot like the S&P 500, only not as good.” Right now, GE’s in a downtrend hovering around support, the price it has difficulty sinking below. That said, a break down, or sudden movement, below the support line could offer a serious downside for investors. Fitzpatrick warns to steer clear if that’s the case.

Wal-Mart (WMT): “After last week, Wal-Mart looks more on the hit list than the hit parade,” joked Fitzpatrick. The stock was trading around its 200-day moving average (the trend line of a stock’s average price over the last 200 days) but got obliterated after weak earnings. It’s that beating that Fitzpatrick noted makes for an enticing buy. After all, he said, “Wal-Mart’s not going anywhere. It makes for a low-risk long.”

Caterpillar (CAT): Right now, CAT’s in an uptrending channel, meaning that its price is moving up in a range of higher highs and higher lows. It cleared its 50-day moving average, which is a good sign given that it’s on the move for a sustained upswing. Fitzpatrick recommended buying at the next low point in the channel, likely around $42.

Caterpillar, Illinois Tool Works and CSX: Jan 9

Caterpillar , from “Mad Money”: The stock made another appearance on Fitzpatrick’s list on Friday.

Illinois Tool Works (ITW), from “Mad Money”: With a strong bottom that occurred a couple of months ago and “obvious resistance” (the short term “ceiling” for the stock) around $45, ITW looks like it's making a positive turnaround. “You can buy now, but keep a stop around $35,” said Fitzpatrick.

CSX (CSX), from “Fast Money”: “There’s not a real bad setup here,” said Fitzpatrick about the railroad company. CSX has been trending lower recently, but it has narrowing Bollinger bands, an indicator that suggests that volatility is decreasing for this stock. “I’d be a buyer if it moves above its 50-day moving average,” he said. “Otherwise, I’d just sit at the station and wait for the right train to come.”

Johnson & Johnson, Novellus Systems and Monsanto: Jan 8

Johnson & Johnson (JNJ), from “Mad Money”: The
Band-Aid maker fell out of an uptrend a few months ago and is consolidating now, but it might not see big upward movement for a while. “If you’re a trader, move on,” Fitzpatrick warned. He did recommend considering it for its decent dividend yield as well as its antirecession qualities, saying that "if you believe we’re going to have more of a recession, this is your first aid right here.”

Novellus Systems (NVLS), from “Fast Money”: Novellus recently hit a low on abnormally low volume, a good sign that suggests that investors are reluctant to sell right now. If it begins to trade higher past its 50-day moving average, consider buying, said Fitzpatrick. It’s a sign that the bulls have power in this play.

Monsanto (MON), from “Fast Money”: Monsanto recently gapped up on good earnings, a very bullish signal. With resistance around $91 right now, Fitzpatrick recommended waiting for a small pullback in price to buy.

Mosaic, MasterCard and Freeport-McMoRan: Jan 7

Mosaic (MOS), from “Fast Money”: The company recently announced great earnings driven by price increases in potash and phosphate. Right now, this stock has formed a bowl -- a channel that’s arched -- and looks to be trending upward. Despite the trend, Fitzpatrick recommended waiting for a pullback before taking a position. After all, a few consecutive days up means that the stock price is due for a rest soon.

MasterCard (MA), from “Fast Money”: With this stock trading in an upward-trending channel right now, Fitzpatrick suggested waiting for a pullback in this volatile market.

Freeport-McMoRan (FCX), from “Fast Money”: Freeport isn’t a buy or a sell right now according to Fitzpatrick. “If you’re long, you’re not wrong,” he said, adding that "if you don’t, you’re late, so wait.”

Research in Motion, Genentech and McDonald’s: Jan 6

Research In Motion (RIMM), from “Fast Money”: RIM is an interesting stock right now, with a price around its 50-day moving average. According to Fitzpatrick, any pullback is a time to buy. "That’s what it takes to get the bulls to snort," he said.

Genentech (DNA), from “Fast Money”: This biotech stock is moving horizontally, meaning that a breakout could happen any time. Fitzpatrick recommended buying around $83, with a stop around $81 just in case the New Year’s volatility got the best of Genentech.

McDonald’s (MCD), from “Fast Money”: Despite a fickle market, McDonald's has seen nothing but upside since November. “Now we’re going higher once again,” said Fitzpatrick. He recommends buying on a pullback below the 20-day moving average, which it has recently been trading above. “Keep a 5% stop, because you don’t want to lose your money on this Big Mac,” he said.

To see these stocks in action, check out the target="_blank">"Stocks I Saw on TV" portfolio on Stockpickr.

And if you want to hone your own technical stock picking skills, you can pick up some tips on Stockpickr’s technical analysis forum.

Posted on Jan. 14, 2009

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