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Issue #24 
June 17, 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
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 has successfully tested the 8.58-8.66 daily closing support level and seems poised to test the 9.05-9.11 resistance level. The resistance level on a closing basis is very strong and its likely that SONS will have some trouble closing above it. Nonetheless it is also likely that after the re-test of support that the stock will be working higher rather than lower.
ANGO had a breakout day on Friday after confirming a successful re-test of the 20-day MA support at 16.30-16.40 and going above, once again, the 50 day MA in the process. In addition, ANGO, had the highest daily and weekly close since the drop down to the $16 level which happened at the end of March.
Movement to the upside should now be strong and swift with the first objective being 18.13 and then 19.98. Support should now be found, on a closing basis, at the previous weekly closing high at 17.14. Stop loss orders should now be raised to 16.54.
JDSU has strongly reversed its recent downtrend and has managed to gap above the 20 day MA and is seemingly on its way to the 50 day MA currently at 14.30. JDSU is likely to have a lot of problems closing above the $14 level as that was the major support and breaking point prior to the drop to 12.50 and this subsequent rally.
Gap down at 13.05-13.30 has a high probability of being closed and should work as a magnet for the sellers to come in and sell above the $14 level.
TGB continues its 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 3.21.
CRYP continues to have strong resistance up around 25.40 and support now found in the low 24's. Stock is presently waiting for direction though the weekly chart signals that the downside is the most probable.
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.
HRB closed the gap down at 22.58 and tested successfully the 50 day MA as well as support at 22.50. Resistance is minor (from the 20-day MA) at 23.20. Strong resistance should be found at 23.62 and then major at 24.00. Stops in HRB should be placed at 22.28.
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 7.50.
2) ANGO - Added position at 16.72. Now averaged long at 16.56 with stop loss now at 16.14. Stock closed Friday at 17.37.
3) JDSU - Averaged short at 13.54. No stop loss at this time. Stock closed Friday at 13.88.
4) COGT - Added position at 14.87. Averaged long now at 14.38. Stop loss raised to 14.59 stop close only. Stock closed Friday at 15.01.
5) MDTL - Liquidated short at 14.73. Profit on the trade of $117 per 100 shares minues commession.
6) SONS - Averaged long at 7.99. Stop loss order raised to 8.52 stop close only. Stock closed Friday at 8.78.
7) TGB - Long at 3.18. Stop loss raised to 3.21. Stock closed Friday at 3.75
8) >B>CEGE - Covered short position at 3.76. Loss on the trade of $41 per 100 shares plus commission.
9) CRYP - Shorted at 24.83 with a stop loss at 25.51. Stock closed Friday at 25.02.
10) REV - Added position at 1.38. Averaged long now at 1.34. Stop loss raised to 1.31. Stock closed Friday at 1.40.
11) LOOP - Liquidated long purchased at 20.09 at 22.01. Profit on the trade of $182 per 100 shares minus commission.
12) MWA - Covered short at 16.20. Profit on the trade of $10 per 100 shares minus commission.
13) HRB - Purchased long at 22.59. Stop loss order at 22.28. Stock closed Friday at 23.11.
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Chart Analysis Has the uptrend resumed?
DOW Friday close at 13639
After a fast re-test on Wednesday of the recent low at 13257 (made on 6/8) the DOW staged a strong 400 point rally moving back above the 20-day MA it had broken on the way down and testing the previous all-time high at 13690. The DOW failed to make a new intra-day (13690) or closing high )13668).
The failure to make a new intra-day high or close on a new high leaves open the possibility of the DOW ending up with a double top as well as a failure to resume the up-trend.
Using a 10-minute intra-day chart some support is found at 13618. The strong support will be seen at the 20-day MA at 13507 and then stronger at 13441 which was previously an important weekly and daily closing low. At this time, before a new high is made, breaks below 13441 will be quite negative.
On the upside the only resistance found is the previous high at 13690.
The DOW is committed to making new highs as the NASDAQ was able to do so on Friday. Nonetheless with the strength seen on Friday in the indexes it was worrisome to see the DOW unable to follow through and make new highs as well.
I do believe the indexes will make new highs this week but I also believe that the indexes are likely to have many peaks and valleys going into the summer months and new highs will not generate a lot of new buying.
NASDAQ Friday Close at 2626
It is becoming evident that the NASDAQ is beginning to lead the indexes. On Friday the NASDQA was the only index that was able to make a new high as well as a new closing high. The previous intra-day high at 2626 was broken and the close at 2626 was 13 points better than the previous high close at 2613.
The NASDAQ also has built a very strong support level around 2531 and during the last two weeks tested successfully not only the support but the 50 day MA as well.
On a closing basis the 2613 should act as support and using the 10-minute intra-day chart support is also found just below the 2600 level. The NASDAQ has been quite consistent with its peaks and valley and new highs have generally been 20-30 points higher, on an average, over the previous highs. Taking that into consideration a rally up to the 2656 would be the objective of this up move.
Also taking into consideration that we are heading into the summer doldrums and peaks and valleys will likely be the "main course" I would expect the NASDAQ to continue with the same pattern. If the pattern continues and a rally up to 2656 ensues, the next correction would likely find strong support around 2590.
S&Poors 500 Friday close at 1532
The SPX like the DOW failed to make new highs and the same scenario applies. A possible double top may be in place. Expecting last week's rally to continue it is likely that the SPX will be able to make new highs next week.
This is still the only index that shows a previous resistance level of consequence. Going back to year 2000 the SPX made an all-time intra-day high at 1555.
Like the NASDAQ the SPX went down to the 50-day MA twice in the past week and a half and held. This index has been a favorite of the charts during the last 4 months as the chart points have held almost to perfection.
It is my belief that the SPX will get back up to the 1555 high it saw back in 2000 and fail to get above on this occasion. This fits in well with the NASDAQ rallying to its objective at 2656. It would also mean the DOW would get above 13700 as well.
As I mentioned previously I do believe the summer doldrums will soon begin and a pattern of peaks and valleys in the indexes will be the norm. Such a pattern will mean that selling rallies and buying dips will be the traders strategy.
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Stocks CHART Outlooks
COGT (Friday Close at 15.01)
COGT broke out of a major resistance area between 13.84 and 14.78 a couple of weeks ago. Both the weekly and daily charts recorded this event as a clearly defined breakout. After the breakout COGT rallied up to the 15.62 level but ran into a correcting DOW and the rally stalled. During the past two weeks COGT has corrected back down to the breakout level and, so far, been successful in its re-test of what is now support.
In addition, this past Friday COGT went down to 14.80 and re-tested not only the breakout area of 14.71-14.78 but also the 20-day MA, seemingly with success.
COGT has very little resistance on the upside. The recent high of 15.62 will act as resistance but in looking at the daily charts the stock is into new 52-week highs and using the weekly charts there are only two "minor" resistances above at 16.55 and 18.13 before reaching a major previous weekly low at 20.48.
With strong fundamentals as well as a rosy-looking contract with the FBI for $400 million scheduled to be reviewed in the fall it is highly likely the up-trend will continue and COGT reach much higher price levels.
Purchases of COGT at Friday's closing price and using a 14.59 stop close only and an objective of 20.48 will give a risk/reward ratio of over 12-1. It is difficult to give a lower objective as there really is very little resistance on the chart between here and the 20.48 level.
My rating on the trade is a 7.5 (on a scale of 1-10 with the strongest probability rating being 10).
LOOP (Friday close at 21.94)
LOOP has been able to accomplish my upside objective with the rally seen the other day above 22.00. The rally started at 18.34 and using the previous rally range from 15.00 to 19.00 I anticipated that a high might be seen on this rally at 22.34. The trend on this stock is up but even though it has only been trading for less than a year it has already shown a tendency to get into a sideways trading range after a strong run-up.
The 20-day MA is presently just below $20 and no support of consequence has yet been built other than down in the mid 18's. It is likely that a correction phase down to test the psychological support level at $20 as well as a base building stage is needed before continuing the up-trend. Drops down to the $20 are likely to happen.
On Friday LOOP went down close to the $21 but with the strength in the DOW and some strong late-afternoon buying in LOOP the stock rallied up close to the $22 going into the close. Follow-thru buying is anticipated to happen the early part of the week and new highs are expected to be made above the previous high of 22.17.
Since LOOP is into new all-time highs there is no visual resistance on the chart. Going short LOOP will require money-management stops to be used. Sales of LOOP above 22.30 should be considered and based on an objective of $20 to the downside a stop loss order at 22.80 will offer a 4-1 risk/reward ratio.
This is NOT a high probability trade as it is going against the trend and the stock has no previous resistance level to look at. If the short position is filled and my upside objective is right, the stop loss order will be able to be lowered soon thereafter.
My rating on the trade is a 5.5 (on a scale of 1-10 with the strongest probability rating being 10).
CALM (Friday closing price 14.80)
CALM is a stock that I have been on the verge of mentioning for the past couple of weeks but the stock had not yet broken out of its recent sideways trading range. On Friday CALM was not only able to breakout from a weekly closing high going back 3 years but also broke out of a 4 month sideways trading range between 14.60 and 11.50.
In looking at the weekly charts CALM shows a large flag formation that started with the low of the flagpole at 6.88 and the flag built between 14.60 and 11.50. Objective of the Flag formation is the $20 level.
In addition, for the past 4 weeks CALM had been testing the 20-week MA successfully and now the stock seems poised for a concerted move to the upside.
Intra-week resistance at 14.90 does exist, from two previous weekly highs back in 2004, but CALM had the highest weekly close this week since 4/23/2004. The weekly close states the stock is resuming its upward trend toward the $20 level. Though there is some intra-week resistance at 14.90 and then again at 16.48, there is no weekly close resistance until 20.01 is seen.
It is probable that an intra-day or intra-week retest of the breakout level at 14.00 (weekly) or 14.29 (daily) will be seen. Purchases between 14.00 and 14.35 can be made. The objective is the $20 level. Stop loss orders should be placed at 13.59 making this about an 8-1 risk/reward ratio.
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 7.54)
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 found itself, once again, making new 20-month lows this past week.
Two weeks ago 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 on rallies above 7.75 and up to 8.00 using a stop-loss order at 8.17 and a minimum objective of 6.50 and probable objective of 5.49. 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 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 View Jun 10, 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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