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Issue #29 
July 22, 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
Using the daily charts COGT showed some weakness on Friday as it closed below both the 20 and 50 day MA's. Nonetheless, in looking at the weekly charts the move down to 14.23 can be considered a re-test of the 20-week MA as it went right down to it. There is strong support at that line as well as at 14.18 (the previous weekly low). Keep in mind that on the week of June 8th the 20 week MA went above the 50-week MA and that is normally considered a strong buy signal. If Friday's low of 14.23 holds and the stock rallies from here it will likely be the beginning of a new up-trend.
SONS closed the gap and immediately bounced up after. In addition it tested the 20-week MA in the process. Since the 20 and 50 day MA are almost crossing it is likely that SONS will have a definitive week with the probability being to the upside. Another re-test of the 9.11 level is what I believe will happen this week.
ANGO touched the 50-day MA on Friday with the drop down to 17.20 The strongly overbought condition that existed has now been erased and any movement above 18.08 or below 17.20 will likely be decisive. Those are the two parameters in place right now.
NUAN has now had a re-test of the closing high at 18.48. It still shows a gap down between 17.19 and 17.25 which is a probable objective but as long as it holds above that level on a closing basis it should maintain its recent up-trend. It is evident that 17.19-17.27 and 18.48 is the present trading range and any move outside of that range will likely generate additional follow through.
CRYP looked badly this last week and seems poised for a major breakdown. A break below 23.00 could generate enough momentum to take the stock as low as $18 overall. Adding short positions at that point would likely generate nice profits. The flag formation on the weekly charts looks strong and the action this past week seems to support a break. Unfortunately on the upside I have no clearly defined level where a stop could be placed other than at 24.76. A money stop can be used as all shorts in this stock should be in profit.
PMCS confirmed its breakout and should move strongly to the upside. Stops in PMCS can now be raised to 7.90 as the 8.01-8.15 area should now be strong support. PMCS should now hold above the 8.40 level on an intra-day basis. Objective of this break is 10.34.
GIGM has also looked quite weak and a break of 12.82 should generate a drop down to the 50-week MA at 11.97 as there is no support under 12.82.
WOLF tested and broke below the 20-day MA at 14.93 on Friday but was able to close above it. Major weekly support continues to be between 14.02 and 14.25 but a break below the recent low of 14.72 will likely generate a move down to the 50-day MA and support at 14.25. With the strong weekly up-trend and $20 objective stops should be no closer than 13.90. If you want to have a sensitive stop, though, then 14.66 is the place to put it.
SWKS had a bullish report and is now on a breakout. It did leave a gap between 8.33 and 8.57 that might get filled but the 8.38 weekly closing price that was broken should now act as strong support. In addition if a second gap is seen then it might turn out to be a breakaway gap and a runaway gap and should cause the stock to rush up toward the $10 level in a short time.
JSDA broke below the 20-day MA and now has an a possible objective on the downside the 14.57 low seen prior to the low at 13.65. In addition there is a gap between 14.62 and 14.75 that is working as a magnet for the sellers. In reality a drop down to the level, though not negative, negates the two-day rally from 14.75 to 18.55 that was making the stock chart look good. Certainly if the stock reverses here and gets above the 20-day MA this note may be moot but right now it seems the gap at 14.62 is an objective. This is a strong moving stock so even if it gets down to that price the wide ranges of this stock makes it a good play.
Updates on last week's mentions and stock positions
1) PMCS - Averaged long at 7.90. Stop loss order raised to 7.90. Stock closed Friday at 8.47.
2) ANGO - Averaged long at 16.72. Stop loss changed to 17.16. Stock closed Friday at 17.48.
3) AMTD - Purchased at 19.65 and liquidated at 19.06 for a $59 loss per 100 shares plus commission.
4) COGT - Averaged long now at 14.38. Stop loss changed to 14.12. Stock closed Friday at 14.38.
5) SIL - Purchased at 19.93 and liquidated at 19.61 for a $32 loss per 100 shares plus commission.
6) SONS - Averaged long at 7.99. Stop loss now at 8.06. Stock closed Friday at 8.42.
7) SWKS - Purchased at 8.35. Stop loss now at 7.83. Stock closed Friday at 8.78
8) JSDA - Purchased at 16.08. Stop loss now at 14.50. Stock closed Friday at 15.27.
9) CRYP - Shorted at 24.83. Stop loss changed to 24.76.Stock closed Friday at 23.21.
10) REV - Liquidated longs averaged long at 1.34 at 1.21. Loss on the trade of $26 per 100 shares (2 mentions) plus commission.
11) GIGM - Shorted at 13.71. Stop loss at 14.30. Stock closed Friday at 12.94.
12) COGO - Liquidated long purchased at 16.16 at 15.87. Loss on the trade of $29 per 100 shares plus commission.
13) WOLF - Long at 14.38. Stop loss now at 14.66. Stock closed Friday at 15.03.
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Chart Analysis DOW closes at 14000!
DOW Friday close at 13851
The DOW continued its upward climb and was able to get up to a closing high of 14000 this past week. There was no news of consequence to stoke the sell-off so it must be attributed to general resistance found at even century levels such as 14000.
Since there is absolutely no previous resistance and only a "psychological" level can be used to determine where sellers may appear it must be assumed that the 14000 level will be a pivot point for the next week or so.
Support will continue to be the previous high 13691. That price was also a breakout from a flag formation on the weekly charts. Breakouts from flag formations are generally not tested and based on that its unlikely 13691 will be seen.
Based on this assumption it is likely that the DOW will have higher highs and higher lows than this past week. The low this past week was 13803 and the high 14021.
Using a sensitive 10-minute chart it looks like 13824 will act as intra-day support and 13900 as intra-day resistance. Above 13900 there isn't much until 14000 is seen again.
The only possible chink-in-the-armor will be the earnings reports that are still due out over the coming weeks. From a weekly chart perspective alone, the DOW is on a roll and should continue to move up from here.
NASDAQ Friday Close at 2687
The NASDAQ chart is more clearly defined in some ways than the DOW chart. To begin with there is a potential double bottom at 2675 when using the daily charts. I say "potential" because the second low was seen Friday and it cannot be called a double bottom unless the index trades higher on Monday without going down to 2675.
There is a gap down between 2652 and 2662 that is likely to act as a magnet as well as the 20-day MA which is currently at 2651. This all spells out a clearly defined support level for the NASDAQ between 2651 and 2675 that will be hard to break under the present bullish scenario.
The NASDAQ has been having corrections that average around 75 points so a drop from the recent high at 2725 down to 2650 would fulfill perfectly the recent correction numbers seen.
For the first couple of days of this coming week its likely that 2675 will act as a strong pivot point for the NASDAQ. A break below that level will likely take it down another 25 points to the 2650 level. Staying above that level will generate a double bottom and cause a rally back up to an intra-day resistance at 2700 and a possible re-test of the 2725 high.
In looking at the 10-year chart the NASDAQ does now show any level of resistance until the 3043 level is seen. The "cup-and-handle" formation presently in place did give an objective of 2965 so it all seems to fit neatly in place.
It also looks evident that since the NASDAQ has all these clearly defined levels of chart information that it be used at this time as the main indicator to make determinations on the direction of the indexes.
S&Poors 500 Friday close at 1534
The SPX is the only index that has a possible resistance level in place with the intra-day high of 1555 made in the year 2000. This past week that level was tested on two occasions and both times it held. It is evident that for the time being the traders will be watching to see what the SPX does at that price.
One interesting thing to note. On the SPX the 20 and 50 day MA's are close to each other and on Friday the low of the SPX (1529) almost touched the 20-day MA and the 50-day MA is not much lower since it is at 1519. With the same type of a gap formation as the NASDAQ sitting between 1517 and 1529 a drop down to that level to close the gap should be aggressively supported. If the SPX gets below 1517-1518 it might be in trouble.
The SPX has shown good general support as the low made on Wednesday was not broken or touched as it was with the DOW and the NASDAQ.
Intra-day resistance should be seen at 1542 and support at 1530. A break below 1530 will likely take the index down to the 50-day MA and gap area at 1519.
Though there was quite a bit of volatility in the indexes during the last three days of the week the weekly up-trend is intact and no damage was done to the charts. Probabilities of continuing the up-trend this week are strong but the breakdown levels are quite clear so trading the indexes this week should be easier than normal
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Stocks CHART Outlooks
Well positioned stocks in breakouts or at support levels should be the way to go this week.
VPHM (Friday Close at 14.21)
VPHM is a stock with an attractive weekly up-trend but having a short-term downtrend that finds the stock at an attractive price to purchase. In addition, both the 20 and 50 day and week MA are close to crossing which suggests that a strong move will happen shortly.
VPHM had a closing weekly high of 21.97 18 months ago and within 5 months proceeded to drop all the way down to a closing low of 7.80 seen in July of 2006. After that low was made VPHM staged a rally up to a closing high of 17.95 made in February of this year.
Over the past 5 months VPHM has been in a downtrend and 3 weeks ago broke below a strong previous support at 13.96 (went down to a daily closing low of 13.18) and looked like it was going lower. VPHM managed to reverse that break and stage a rally up to 14.90. On Wednesday of last week the low of 13.18 was tested with a drop down to 13.70 and on Thursday and Friday managed to close right on the 20-day MA.
With all the MA's getting ready to cross each other and with the fact that VPHM is actually in a weekly up-trend (but has corrected down and tested major support and is now in an oversold condition) it looks like it is now ready to begin to trend upward once more.
Purchases of VPHM between Friday's closing price of 14.21 and down to 13.97 can be made and a stop loss placed at 13.51. There are three objectives starting with the most recent high at 16.07, then the high of the recent weekly up-trend at 17.95 and lastly the 4-year high area that would be the main objective (should the 17.95 level get broken) up at 20.80. Using those three objectives the risk/reward ratios would be 3-1, 7-1, and 13-1.
My rating on the trade is a 7 (on a scale of 1-10 with the strongest probability rating being 10).
FCEL (Friday close at 8.25)
For the last 8 weeks FCEL has been in a strong weekly up-trend and two weeks ago was able to make a 10-month weekly closing high above the previous high of 7.86.
FCEL confirmed that breakout with a second weekly close and last week had its first week in the red, after an 8 week run of green weekly closes, but still managed to close above the 7.86 breakout level.
Using the daily chart FCEL has been in a major up-trend that started on 5/18 at 6.32 and has yet to falter. For the last 14 trading days FCEL has been trading in a sideways fashion getting rid of its overbought condition and now looks ready to re-start its up-trend after having established itself above the 7.86 breakout level.
During the last 8 trading days FCEL has touched the 20-day MA on 4 different occasions (including Friday) and it has held each and every time. There is evidently some resistance at 8.40 as it has been the high on 4 different occasions over the past 3 weeks. A high with so many touches is likely to break and when it does a strong move up will likely ensue.
The 20-week MA is beginning to cross over the 50-week MA and that should be a strong signal that the stock will accelerate its upward movement.
Purchases of FCEL at Friday's close of 8.25 and down to 8.10 and using a sensitive stop-loss point at 7.90 and an objective of 11.37 will offer a risk/reward ratio of 10-1. There is some resistance between 9.30 and 9.65 but it is considered to be minor.
My rating on the trade is a 7.5 (on a scale of 1-10 with the strongest probability rating being 10).
COMS (Friday closing price 4.33)
COMS is a stock with very high open interest and volume but for the past few years has traded in a very conservative manner and with relatively small ranges. A good friend on mine who follows COMS very closely, from a fundamental point of view, told me last week to look out for a spike up in price very soon (he did not elaborate). Since I respect him and he mentioned it I decided to take a look at the chart.
One thing immediately caught my attention, in looking at the weekly chart, and that is that for the first time since May 2003 the 20-week MA is getting ready to cross above the 50-day MA. The last time that happened, the stock was trading at 5.30 and within a few months the stock hit a high of 9.34.
COMS also shows some recent evidence that it is getting ready to move upward as it broke above both the 20 and 50 week MA's this past week after having had a move down to test the 4.01 level that was considered strong support and should now be considered major support. The re-test followed by the breakout from the 20 and 50 week MA's seems to be the kind of a buy signal that could generate a strong up move over the next few weeks and months.
COMS has a short term trend-line that would be broken with a move above 4.80 and would give an objective of 7.80. The objective is reached by measuring the high point of the trend (5.70) and the low point of the trend (3.60) and applying to difference (objective) to the high point. This also means that a break above 4.80 should be used to add positions.
A purchase of COMS between Friday's closing price of 4.42 and down to 4.29 (strong intra-day support) and using at stop loss order at 3.92 and an objective of 7.80 will give a risk/reward ratio of 6-1.
My rating on the trade is a 7.5 (on a scale of 1-10 with the strongest probability rating being 10).
PMCS (Friday closing price 8.47)
PMCS has now established and confirmed itself to be on a breakout and positions can now be added. There is no resistance of consequence until the 10.77 level is reached and the support level at 8.01-8.15 is now considered strong.
Purchases of PMCS between 8.40 and Friday's closing price of 8.47 and using a stop loss order at 7.90 and an objective of 10.77 will give a 4-1 risk/reward ratio.
My rating on the trade is a 7 (on a scale of 1-10 with the strongest probability rating being 10).
View May 20, 2007 Newsletter View May 27, 2007 Newsletter View Jun 03, 2007 Newsletter View Jun 10, 2007 Newsletter View Jun 17, 2007 Newsletter View Jul 01, 2007 Newsletter View Jul 08, 2007 Newsletter View Jul 15, 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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