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Issue #23 
June 10, 2007 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
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Updates |
Stock Indexes Update |
Stock Picks for Next Week | |
| Updates on held stocks
MDTL Rallied late Friday above the 15.20 level. Chart has once again turned bullish and profits on short positions should be taken on any dip back down to 14.76 or on rallies above 15.30. A breakout above 16.00 could generate a rally up to 18.00. Long positions can be considered should that happen.
COGT is on a major breakout and looking very strong. There is "minor" resistance between 16.16 and 16.55. COGT will now show strong support at 14.61-14.78.
SONS was able to break above the previous high of 8.77 and closed above the previous weekly high close of 8.24. On Thursday and Friday it tested the previous high closes at 8.58 and 8.66 and held. Follow-thru to the upside is expected this week. Some resistance will be found at 9.11-9.14.
ANGO broke out above the 20 and 50 day MA. Objective is now 18.13 and 19.98. Support will now be strong at 16.40.
JDSU seems to have found a bottom and drops back down near 12.50 should be used to cover shorts. Resistance is strong at 13.30.
LOOP continues to look strong for a rally up to $22. Support is strong at $20. Minor resistance at 20.90 and all-time high resistance at 21.70.
TGB continues is up-trend. Resistance is now found at 3.90 and major at 4.25. Support strong at 3.50. Stop loss order should be raised to 8.21.
MWA cannot make up its mind. Breaks below and above the 20 day MA were common this last week. Based on Friday a rally up to 16.40 is likely. A close below 15.97 is required to stimulate the downside.
CRYP failed to maintain rally and broke below the 20-day MA on Thursday. On Friday it rallied and closed at an important pivot point close at 25.47. A daily close above 25.26 should generate liquidation of short position.
REV is on a breakout. Stop loss orders should be raised to 1.31. Positions should be added on rallies above 1.49.
PMCS has been going sideways around the 7.50 pivot point. Stop loss orders should be changed to 7.19.
CEGE looks weak as it broke below the 20-day MA. Stops should be placed at 3.76. Rallies above 4.18 will generate new buying.
COGO is in a sideways trading range between 15.75 and 17.30. Mental stops should be maintained at 17.56. Drops down to 16.00 should be used to cover short position. New purchases should be made on drops down to 15.65.
Updates on last week's mentions and stock positions
1) PMCS - Purchased at 7.72. Stop loss order at 7.19. Stock closed Friday at 7.57.
2) ANGO - Added position at 16.72. Now averaged long at 16.56 with stop loss now at 16.14. Stock closed Friday at 16.89.
3) JDSU - Averaged short at 13.54 with a stop loss at 13.40. Stock closed Friday at 13.07.
4) COGT - Averaged long at 14.14. Stop loss raised to 14.55. Stock closed Friday at 15.20.
5) MDTL - Shorted at 15.90 with a stop loss at 16.23. Stock closed Friday at 15.19.
6) SONS - Averaged long at 7.99. Stop loss order raised to 8.52 stop close only. Stock closed Friday at 8.66.
7) TGB - Long at 3.18. Stop loss raised to 3.23. Stock closed Friday at 3.57
8) >B>CEGE - Purchased at 4.17. Stop loss order at 3.76. Stock closed Friday at 3.91.
9) CRYP - Shorted at 24.83 with a stop loss at 25.32. Stock closed Friday at 24.57
10) REV - Long at 1.30. Stop loss raised to 1.32. Stock closed Friday at 1.43.
11) LOOP - Liquidated long purchased at 18.85 at 21.50. Profit of $251 per 100 shares (commission included).
12) MWA - Short at 16.30 with a stop loss at 16.85. Stock closed Friday at 16.14.
13) UTSI - Liquidated at 6.47. Loss on trade of $107 plus commission per 100 shares traded on each mention.
14) LOOP - Purchased at 20.09 with a stop loss at 19.90. Stock close Friday at 20.56
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Chart Analysis Wild Week, Wild Finish
DOW Friday close at 13424
The first correction to the recent 1760 point up-trend began this past week with a 430 point drop intra-week, down from the all-time highs made last Friday. The DOW started falling on Tuesday and before the dust cleared the index had broken below the 20-day MA for the first time since March 20th.
On Friday the DOW shook off the selling and was able to stage a 154 point rally thus providing hope for the buyers that the correction is over and induced fear to the sellers that have seen this type of action repeatedly over the past few months that the correction might be over.
Nonetheless the break of the 20-day MA provides a strong signal that the DOW may have reached a temporary top and that the rally on Friday will simply lead to a re-test of the highs. By closing below the most recent correction low close at 13507 the DOW has given its first sell signal since the up-trend began in the end of March.
It is now likely that selling will greatly increase as the DOW tries to move back up toward the highs and with the summer doldrums just around the corner it will be difficult for the DOW to re-start the recent up-trend.
Resistance will be decent up around 13441 (previous important closing low), strong at 13507 (20-day MA it broke below), and very strong at 13624 (previous high close prior to all-time high close). The 20-day MA that was broken to the downside this week will act as resistance on an intra-day basis and will provide an area for the sellers to defend.
Support in the DOW will be limited as most of the near-term previous supports were broken this past week. Decent support can be expected at 13210 but other than that only minor intra-day supports at 13326 and 13268 will be found. Expect continued volatility the first part of the week until a better defined short-term trend is established.
With many of the DOW stocks having broken their supports, 20-day MA's, and in some cases the 50-day MA's as well, it is unlikely that the rallies will maintain their strength. It is now likely that the DOW is in a corrective phase that will last several weeks and may cause it to test the previous breakout level at 12795.
NASDAQ Friday Close at 2573
The NASDAQ did not suffer as strongly as the other indexes this past week and was able to accomplish several important and supportive chart objectives in a short period of time. The NASDAQ not only broke below the 20-day MA but also got down to the 50-day MA on Friday. In addition a re-test of the major support at 2531 took place and the response was both immediate and strong. The NASDAQ was able to reverse itself and close above the 20-day MA on Friday as well.
With a very strong daily and weekly support level between 2505 to 2531 it seems unlikely that the NASDAQ will break much further. As it is, the NASDAQ was the weak sister during this last rally and during this correction (if we are in a correction) it should therefore act as the strong sister on declines.
Rallies in the NASDAQ up to 2580 and 2600 (resistance levels) should be probable and expected and declines should be aggressively supported between 2505 and 2531.
It was quite indicative when the close on Friday was at 2573. The previous high weekly close prior to the last run up to 2626 was 2572. By closing above that level it means that no sell signal has been given on the NASDAQ. By having successfully tested the 50-day MA and negated the break of the 20-day MA the NASDAQ has now become the index to follow during this period of time.
S&Poors 500 Friday close at 1507
The SPX has been the index that has most clearly defined the index charts during the last few months. Like the DOW the SPX gave a sell signal this past week. With a lower weekly close below the previous low weekly close the SPX has stated that its recent up-trend is likely over and that a corrective phase will likely ensue.
Like the NASDAQ the SPX also went down to its 50-day MA at 1488 on Friday and bounced up strongly from it. Unlike the NASDAQ, it was not able to get back up above the 20-day MA and therefore did not negate the sell-signal given.
Decent resistance will be found at 1512 (previous weekly high), at 1518 (20-day MA), and 1532 (previous important weekly high prior to all-time closing high at 1539). Support will now be seen at 1488-1491 (Friday's low, previous important low close, and 50-day MA).
Though the SPX has been the model of chart consistency in the past few weeks, it is now likely that with this break the index will no longer be as good an indicator to the upside. At least not until the summer doldrums are over and the indexes return to an up-trend.
The indexes are likely to be strong early Monday due to the up-beat close on Friday but volatility is also likely to be present and wide-ranging upside and downside moves are probable. The NASDAQ stocks should be supported during the next few weeks as money will likely flow from the overbought Blue Chip stocks into some of the more depressed stocks in the NASDAQ.
Though it's probable that the indexes are in a corrective phase it is more likely that the correction will be mild and slow rather than strong and swift.
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Stocks CHART Outlooks
ANGO (Friday Close at 16.89)
This past week ANGO generated a strong rally after four weeks of base building in which the stock was continuously under pressure to break. Last Friday the stock rallied at the very last moment to close above 16.14 when it looked like it was going to generate the lowest weekly close in 2 ½ years. At the beginning of this week the selling pressure came anew and when the stock was unable to break below the previous low at 15.70 the stock rallied aggressively above the 20-day and 50 day MA. Such a rally gave notice that the downside is likely over.
For the last three days of the week ANGO has traded and closed right on or slightly above the 50-day MA and now the stock seems poised to rally anew continuing the trend it started this past week.
With the spike up that was made last Wednesday the pressure is now likely over and its unlikely both the 20 and 50-day MA's will be pierced to the downside. Support is found at 16.70 (50-day MA), at 16.40, and 16.20 (20-day MA. Resistance is minor at 17.67 and stronger at 18.13. Above that there is some more minor resistance at 18.45 and then nothing until 19.98 is seen.
Purchases between 16.70 and Friday's close of 16.89 can be made. Using a stop loss order at 16.14 and an objective of 19.98 a 4-1 risk/reward ratio is given.
My rating on the trade is a 7 (on a scale of 1-10 with the strongest probability rating being 10).
PMCS (Friday close at 7.57)
PMCS suffered a strong collapse last year with a drop from 13.77 down to a low of 4.78 made last August. Since that time PMCS has been trying to build a support base from which to rally from and 7 weeks ago was finally able to close above both the 20 and 50-week MA's. Two weeks ago and again last week PMCS tested the break out level at 7.40 successfully. On Friday it tested that level one more time and was able to rally late in the day and close at 7.57.
PMCS seems to have built a nice support base around the 7.40 level on the daily chart but even if that level is broken the weekly chart shows that the 20-week MA is currently around 7.25. With the weekly chart on a breakout above both weekly MA's and strong support being seen previously at 7.25 and 7.40 it is likely this support level will hold. PMCS also continues to pivot around 7.50 (as it has done repeatedly over the past 2 years). It is highly likely that this entire support level will hold and a rally out of this area ensue.
A purchase of PMCS at Friday's closing price of 7.57 or lower and using a stop loss order at 7.19 and an objective of $10 will offer a risk/reward ratio of 7-1.
My rating on the trade is a 7.5 (on a scale of 1-10 with the strongest probability rating being 10).
HRB (Friday closing price 22.52)
Twelve weeks ago HRB made a new 4-year low with a drop down to 18.30 but evidently the reasons for the drop were dubious as the previous 4-year weekly close at 20.81 held when HRB closed out that week at 20.88. Over the subsequent 4 weeks that 20.88 weekly closing low was tested on two different occasions and when unable to be broken generated a strong rally.
The subsequent one week rally took HRB up to 23.62 and during that rally a daily gap was left between 21.96 and 22.36. For the next couple of weeks HRB tried to go higher but the gap acted like a magnet and the rally stalled. With the indexes breaking down last week HRB dropped below the 20-day MA and on Friday broke below the 50-day MA and filled the gap with a move down to 21.86. By the end of the day HRB was back above the 50-day MA (thus negating the break).
Support should be strong at the 50-day MA at 21.34 as well as a strong support level found at that same price. Decent resistance will be found at the 20-day MA as well as an previous intra-day high at 23.25. Should HRB close above 23.25 strong resistance will be found at 23.89-24.00. The weekly chart formation suggests a rally up to the 27.00-28.00 level within the next 4-6 weeks if the 24.00 level is broken.
Purchases between 22.34 and Friday's closing price of 22.52 can be made using a stop-loss order at 21.76 and an objective of 26.98. Risk/reward ratio is over 6-1.
My rating on the trade is a 7.5 (on a scale of 1-10 with the strongest probability rating being 10).
BCRX (Friday closing price 7.67)
BCRX is timely stock that might provide some fast profits. BCRX has been in a downtrend since January of last year when it reached a high of 23.00. During the last 10 weeks it has consistently made new lows followed by a short rally. Each rally has been lower than the previous rally and now it finds itself once again making new 20 month lows.
Just last week BCRX generated a short rally up to the 50-day MA at 8.58 and gave it all up by the end of the week and closed below the 20-day MA and below the previous weekly low close at 7.76.
There is no support on the chart until some previous weekly high closes at 6.50 are seen. The closest low close support is 5.49. Resistance should now be strong at the 20 day MA at 8.04 as well at 8.17 (several highs during the last consolidation phase).
Short positions can be instituted between the close on Friday at 7.65 and the previous low close at 7.76. Using a stop-loss order at 8.17 and a minimum objective of 6.50 and probable objective of 5.49 you will have a risk/reward ratio of 3-1 up to 5-1.
My rating on the trade is a 6.5 (on a scale of 1-10 with the strongest probability rating being 10).
View Apr 08, 2007 Newsletter View Apr 15, 2007 Newsletter View Apr 22, 2007 Newsletter View Apr 29, 2007 Newsletter View May 05, 2007 Newsletter View May 12, 2007 Newsletter View May 20, 2007 Newsletter View May 27, 2007 Newsletter View Jun 03, 2007 Newsletter |
The opinions and commentaries by Mr. De Vito are not a recommendation to buy or sell, but rather
a charting guideline, based on his own knowledge and experience, regarding the stocks he is following or
that are brought to him by others. Mr. De Vito does not presently offer a track record of his trading experiences.
No inference of success and/or failure should be assumed. The
information enclosed above, regarding his background, length of trading, and experience, is correct
but is not meant to suggest, state, or infer any future success in trading, based on his opinions. The information herewith included should only be used by investors who are aware of the risk inherent in securities trading. Mr. De Vito accepts no liability whatsoever for any loss arising from any use of the information and/or comments he supplies. |
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