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Tickers in this Article: AUQ, AKRX, RGR, IDCC
The past couple of weeks have seen the stock market fall apart, and there is a real possibility that a bear market cycle has begun. All of the major indexes have undercut important lows and are trading under their prior bases. It will take some time for the markets to work off this selling pressure and build better bases. However, the markets are ripe for a counter trend bounce and there are actually still a few stocks worth considering. Bear market rallies can be ferocious as shorts scramble to cover, but traders should also realize that they are going against the overall trend.

TUTORIAL: Commodities

With gold continuing to press to new highs, gold mining stocks are finally starting to catch a bid. AuRico Gold Inc. Ordinary Share (NYSE:AUQ) was able to clear a base in July as it broke above the $11 level. It pulled back to test this level during the recent market weakness but held above its base. It is starting to build a flag pattern as it consolidates, and could breakout above the flag on the heels of the strength in the precious metal. (For related reading, check out Why Gold Matters.)




Akorn, Inc. (NasdaqGS:AKRX ) is another stock that was able to hold above its base despite the recent market weakness. It cleared its base in late June as it broke above $7, and after a shakeout a few days later, it was able to hold above the base as support. AKRX is now bouncing from this level and is worth watching for a possible breakout.




Sturm, Ruger & Company, Inc. Co (NYSE:RGR) had been building a wide base for most of the year, as it traded between $18.50 and $24. It broke above the base on a huge gap on strong volume in late July, but gave it all back as the markets fell apart. It is now trying to confirm the base as support and is worth watching to see if bulls can defend this area. If the markets can catch a bid, it could lead to a resumption of the breakout. (For more, see 5 Strong Stocks Poised For A Breakout.)




The list of stocks that remain looking bullish has dwindled to near non existence, but InterDigital, Inc. (NasdaqGS:IDCC) is one stock that has mostly ignored the recent implosion. IDCC broke out of a base on strong volume in late July and has been flagging since then. It backed off after breaking its all time highs set back in 2000, but remains in a healthy consolidation.


The Bottom Line
The markets remain very dangerous for traders as the damage caused by the recent declines will not be easy to repair. There will be sharp moves in both directions, so traders should keep that in mind as they wade back into the market. The stocks above have been able to withstand the recent pressure and are certainly worth watching in the case that the markets can attempt a rally. (For more, see 5 Gold Stocks For The Second Half Of 2011.) Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Charts courtesy of stockcharts.com

At the time of writing, Joey Fundora did not own shares in any of the companies mentioned in this article.

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