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‘Focus on Extraordinary Charts’: Technical Analyst

Expect the market to trade sideways with the "fiscal cliff" looming, with a few exceptions, technical analyst Chris Verrone of Strategas said Thursday on CNBC.


Expect the market to trade sideways with the "fiscal cliff" looming, with a few exceptions, technical analyst Chris Verrone of Strategas said Thursday on CNBC.

On "Fast Money," Verrone said that he saw two problems in the market: Momentum and trend.

"When we talk about momentum, I want to focus on the number of S&P stocks that are making new one-month highs," he said. "We had about 25 percent of the S&P make a one-month high today. That doesn't compare too favorably to the number of stocks at new one-month highs after the June 2012 low and after the October 2011 low, where we were up to 60, 70, 80 percent of stocks making new one-month highs, so the momentum for us I'd like to see off a bottom hasn't been present just yet."

With highs on the light side, Verrone said that the majority of companies were restrained.

"We only have 55 percent of stocks above that 200-day moving average, so most stocks still have resistance on top of them. I think that puts a cap on us in that 1,430-1,450 range," he said.

Verrone said that the ongoing budget negotiations in Washington — or the lack of a deal to avoid the deadline that would trigger tax hikes and federal spending cuts — would continue to put pressure on stocks.

"I suspect the market does very little of anything over the next four or five weeks as this 'fiscal cliff' situation is digested," he said. "We've been telling clients: Stay bullish on the good ones, stay bearing on the bad ones, and stay agnostic on the whole."

(Read More: Watch Stock Market's 'Whipsaw Swings': Brown)

Verrone said that investors need to focus on "extraordinary charts," or stocks that have broken above sloping 200-day moving averages.

One such stock was Vulcan Materials, which Verrone said saw "a massive bearing to bullish reversal."

"It has good relative strength," he said. "It has all the characteristics we're looking for in what's otherwise a sideways market."

Written by Bruno J. Navarro, CNBC.com Producer.

Trader disclosure: On Nov. 29, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Tim Seymour is long AAPL; Tim Seymour is long INTC; Tim Seymour is long SBUX; Tim Seymour is long GOOG; Karen Finerman is long AAPL; Karen Finerman is long AAPL PUTS; Karen Finerman is long BAC; Karen Finerman is long BAC CALL SPREADS; Karen Finerman is long JPM; Karen Finerman is long JPM CALL SPREADS; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long MSFT; Karen Finerman is long GOOG; Karen Finerman is long EBAY; Karen Finerman is long M; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short MDY; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long MSFT; Guy Adami is long AGU; Guy Adami is long NUE; Guy Adami is long BTU; Steve Grasso is long AET; Steve Grasso is long AKS; Steve Grasso is long ASTM; Steve Grasso is long AUO; Steve Grasso is long BA; Steve Grasso is long CLF; Steve Grasso is long F; Steve Grasso is long GDX; Steve Grasso is long GOOG; Steve Grasso is long LF; Steve Grasso is long LNG; Steve Grasso is long MHY; Steve Grasso is long MT; Steve Grasso is long P; Steve Grasso is long PXD; Steve Grasso is long NVIV; Steve Grasso is long PFE; Steve Grasso is long S; Steve Grasso is long WYNN; Steve Grasso is long X.

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