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Issue #83 
August 03, 2008 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Indexes Likely To Test Lows!
DOW Friday close at 11326
Though this past week's close was not at a major level of support or resistance, the fact the DOW closed lower this week than the previous week, after having shown strength intra-week, is a big negative. The bulls failed to generate continuation of the recent rally and ceded control back to the bears, without putting up much of a fight, to end the week on a bearish tone.
It is now also confirmed that the high two weeks ago at 11697 was a successful re-test of the 200-week MA, as well as of the 2006 high at 11709. With the weakness at the end of the week, it is highly likely the index will be testing support levels before any further upside of consequence can be considered. In so doing, the threat of resumption of the bear trend will hang over the market and put the bulls on the defensive, needing some positive news to prevent new lows from being made when the recent lows are tested.
Resistance on a weekly closing basis is now major at 11497. On a daily closing basis, resistance will be decent at 11384 and major at 11584. On an intra-day basis, resistance will also now be strong between 11434 to 11444. On a weekly closing basis, support is strong at 11101, minor at 11022 and at 10892, and very strong at 10739. On a daily closing basis, support is minor at 11324 (20-day MA) and again minor at 11216. Support is stronger at the most recent low daily close at 11131 and very strong at the low of the move at 10963. Below that, support is major at 10706.
In looking at the daily chart, it seems highly likely that the DOW will be heading down to the 11128 level next week as that was not only the most recent strong intra-day low but what could also be considered a successful re-test of the recent lows. It is evident that if that level gets broken, either intra-day or on a daily closing basis, that an important support level will have been broken and that index will be under strong selling pressure and likely to make new lows or at least re-test the recent lows at 10828.
Friday's high in the DOW at 11426, and up to the 11444 level of previous intra-day resistance, is a short-term key. If the bulls are unable to generate further upside above that price, the bears will gain the upper hand and the index will be under strong selling pressure all week.
In looking at the weekly chart and based on last week's trading range, probable range for the week will be 11431 and 10968. Should the DOW close next Friday below 11101, it will make a drop down to 10700 the week after highly probable.
Keep in mind that on Tuesday the results of the FOMC meeting will be announced. The anticipation is that there will be no raise in rates and therefore the results of the meeting will not likely have an effect. Nonetheless, should the Fed raise rates (unlikely), that would be seen as a strong short-term negative.
NASDAQ Friday Close at 2310
The NASDAQ closed at the same level this week as last week and did not give any clear signal as to what to expect next week. Nonetheless, the close on Friday continued to be a few ticks above the 200-week MA but not sufficiently enough to state the line has been broken, in fact if the index closes next Friday below the line, currently at 2305, it can be said the line was tested successfully.
This past week, the biggest negative was the inability of the index to follow-through on the 4-week intra-day and closing high seen on Wednesday. In addition, the NASDAQ failed to reach the 50 and 100 day MA's and major intra-day resistance at 2375, which it should have done after the new daily closing high was made. The negative close on Friday and inability to close higher than last week will also be seen as a failure-to-follow-through and should put strong pressure on the index next week.
On a daily closing basis, resistance is very strong at 2343 and major at 2371. After this week's failure-to-follow-through, resistance will also now be strong at 2326-2330. Support, on a daily closing basis, is now again very strong now at 2280 (two previous low closes as well as the 20-day MA) Below that there is decent support at 2264 (recent low close), 2243 and again at 2213. Major support down between 2169 and 2177. Monthly support (Wednesday's close) is strong and also quite important at 2271.
On the positive side, the index did break the previous daily close support level at 2280 this past week and yet also failed to follow through to the downside. That failure-to-follow-through is what generated all the buying and strength in the index this past week. In addition, the index shows an upside pennant formation that if the bottom of the pennant is not broken (a print below 2259) and the top of the pennant is broken (a print above 2353) could still project a rally this coming week up to the 2375 level.
Nonetheless, the close on Friday leaves the traders in the index in limbo without any clear direction as to where the index is headed this week. It is interesting to note that the NASDAQ has not yet had any kind of a re-test of the lows on the weekly chart. Since the overall weekly trend is still down, the probabilities lie on the side of the bears. Should the 2259 level break this week, the objective would be 2203.
The NASDAQ has continued to outperform the DOW over the past couple of weeks. If the indexes show a bit of strength on Monday, anticipating some positive Fed announcement on Tuesday, it is very possible that in the first two days of the week the index could reach as high as 2347. Possible trading range for the week is 2347-2253.
S&Poors 500 Friday close at 1260
The SPX was able to edge out a slightly higher close this week than last week but continued to fail to close at or above even minor levels of resistance on the weekly chart. In simple words, the only positive thing the index has been able to do in the past couple of weeks, is hold itself above the important support level at 1236. The SPX has always been the chart leader of the indexes and the inability of the index to mount any kind of a meaningful chart rally must be seen as a strong negative.
It is important to note that over the past two weeks, the SPX has rallied intra-week over 90 points from an intra-day low of 1200 to an intra-day high of 1291. Nonetheless, on a weekly closing basis the index has only rallied 21 points from a closing low of 1239 to a closing high of 1260. In addition, during a period of time that the other indexes have shown a measure of strength, the SPX has not even been able to close above a minor resistance at 1270, such a weak showing seems to suggest a chart leading index that is seeking lower levels.
On an intra-day basis, resistance is now very strong at 1291 and major at 1327. Some decent resistance will now be found at 1277/1280 as well. Support is minor at 1249 and at 1225. On a daily closing basis, support is very strong at 1224/1228, strong at 1180 and major at 1138. On a weekly closing basis support is very strong at 1236/1239, strong again at 1180, and major at 1141/1143.
With this past week's high of 1284, it can be said the SPX successfully re-tested last weeks high of 1291. Nonetheless, with this week's low of 1255 and close at 1260, it can also be said the index may have been successful in re-testing a decent intra-day support at 1257 as well as the 20-day MA at 1260. It isn't yet known if this re-test was successful or not, until Monday on the close, but it does leave the index somewhat in limbo for the first two days of the week.
The weekly closing chart in the SPX is evidently giving signals of strong weakness, but the overall chart seems to suggest that the traders are waiting for some type of catalyst before committing themselves to a course of action. That catalyst could be the Fed action, or lack thereof, on Tuesday.
Probable trading range for the week is 1225-1277.
Though the indexes have not yet given a clear signal that the downtrend has re-started, they have shown that the upside, without strong fundamental help, is limited and hard to accomplish. It is difficult at this time to give you a clear projection on what the indexes will do this coming week. Nonetheless, the probabilities lie on the side of the bears as the overall trend is down. It must be mentioned that in looking at the individual charts, the three indexes are giving mixed signals with the SPX showing strong weakness, the DOW showing slight weakness but some indecision, and the NASDAQ hinting that some upside is still possible. Which of these indexes is the one to follow this week is not something I can tell you as of this writing.
Overall, though, it must be said that the market is still in a bear trend and that rallies continue to be sold aggressively. The probabilities favor the bears and it is probable that the Fed announcement on Tuesday will not have a positive impact on the market, either way it goes. Therefore, the likelihood is that by the end of next week the indexes will be much lower and with a distinct possibility that some important supports will be broken, thus causing strong selling to appear.
It is probable that on Monday as well as Tuesday morning, while waiting for the Fed announcement, some strength in the indexes will be seen but by Wednesday the selling pressure should resume.
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Stock Analysis/Evaluation
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CHART Outlooks
With the failure of the indexes to maintain their intra-week gains, it is highly likely that without fundamental help that the indexes are heading lower. The market is likely to be under strong selling pressure most of the week and the possibilities of important supports breaking far outweighs the chances of resistances being taken out. As such, short positions will be the preferred way to go.
SNDA (Friday Close at 27.34)
SNDA is a stock that over the past 10 weeks has come down from a high of 37.99 to a recent low of 22.45. In the process of that dramatic downturn the stock took out several major supports that had been in place for over a year. The stock then started a short-covering rally at the very same time that the DOW started its short-covering rally and now that the indexes seem to be heading lower, SNDA should do the same.
In addition, on Friday SNDA reached an area of decent resistance that is likely to hold the stock in check and the risk/reward ratio of this trade seems to be very attractive.
On a weekly closing basis, resistance is very strong between 26.85 and 27.42 (27.59 intra-day) with 2 previous weekly closing highs and 3 previous weekly closing lows in that range. In addition, the 50-day and 100-week MA's are also in the same vicinity. On a daily closing basis support is decent between 25.99 and 26.44 but below that level there is no support whatsoever until 23.75-24.22 is reached. Strong support is again found between 21.68 and 22.06.
It is likely that after having broken so many supports on the way down, as well as getting into a very oversold condition, that the recent 2-week rally was simply short-covering. In addition, the stock has not yet tested the lows so no signal has yet been given that a bottom has been found. Having reached a very strong resistance level it is now likely that SNDA will be heading back down to test the lows. Nonetheless, since so many important support levels were broken during the 10-week downtrend, it is also possible that the stock may resume the downtrend and make new lows. It is important to mention that the support level down at $22, from which the stock rallied, was not considered major support prior to the drop and subsequent rally.
With the indexes likely heading down to test their support levels, the probabilities of SNDA doing the same is very high.
Sales of SNDA at Friday's closing price of 27.34 and placing a stop loss at 28.40 and having an objective of a minimum drop down to 22.12 will offer a risk/reward ratio of 5-1. It is highly probable that by the end of Monday's trading that the stop loss will be lowered down to 27.69 and the risk/reward ratio will skyrocket. In addition, should the downtrend continue and the 21.68-22.06 support level get broken, a drop down to the psychological support level at $20 is likely.
My rating on the trade is an 8 (on a scale of 1-10 with the strongest probability rating being 10).
ALO (Friday close at 21.90)
ALO received a lower than expected earnings report on Wednesday and by Friday the stock had broken below previous support levels of consequence. There is a vacuum below the broken support for another $3 down and with the indexes likely heading lower, the probabilities of ALO continuing to head lower are very high. In addition, any time a strong support level gets broken, it then becomes strong resistance and therefore trading ALO at this time offers a good risk/reward ratio as well as a high probability trade.
As it is, this is a stock that started a downtrend in April of this year from a high of 28.67 and with this recent earnings report, the downtrend seems to be continuing.
Resistance will now be strong at the previous weekly closing low of 22.64. In addition, there are two previous intra-week highs at 22.71 and 22.45. Add to that the 200-week MA at 22.23 and the 50-week MA at 22.95 and that whole area is now one major resistance level. Support, on the intra-week chart at 20.73. Below that there is no support whatsoever until 19.64 is reached. Even then that support is not considered strong as it is from August 2006 and the stock has been lower since then. Decent support is found at 18.51 and major support, on a weekly closing basis is found at 18.00.
ALO shows no recent support as the stock rallied in September of last year straight up from 17.55 up to 25. 27 before correcting back down to 22.61. Now that the 10-month support at 22.10-22.20 has been broken there is a vacuum on the way down until the stock reaches the $18-$19 level.
Sales of ALO between 22.00 and 22.20 and using a stop loss at 22.81 and having an objective of 18.50-19.00 will offer a risk/reward ratio of at least 6-1.
My rating on the trade is an 8.5 (on a scale of 1-10 with the strongest probability rating being 10).
OSK (Friday close at 16.00)
OSK is a stock that has been falling down like a rock since a high of 63.55 was made in October of last year. In April of this year the stock seemed to have found a support level at $35 and was able to generate a rally above $42. In June, though, the stock started to break the support and within a few days, probably due to a negative earnings report or news, the stock gapped down and dropped precipitously to the 16.25 level in a matter of a week. During the last 3 weeks the stock had been trying to build a support level and was successful in generating a rally up to 20.95. On Friday, though, the earnings report came out bearish and the stock once again gapped down from 18.04 down to 17.25 and promptly proceeded to break the previous support level at 16.25 and generate a new sell signal. OSK now finds itself heading lower and without any support of consequence near-by.
It is evident this company is faltering fundamentally in a big way, as the drop in price over a period of 10 months has been impressive. It is also evident the buyers must now be greatly reluctant to step up and support the stock as the fundamental news has been totally negative. Until such a time that the fundamental picture improves, the buyers are not likely to support rallies. With last week's negative earnings report and gap down opening, it is not likely the fundamentals will be changing any time soon, therefore recovery at this time is not likely.
Resistance is now strong between the previous low close at 16.28 and the intra-day high at 16.50, seen on Friday, after the low at 15.47 was made. Support is non-existent until the 13.75 level is seen and even then, that support must be considered only decent to perhaps minor. Stronger support is found between 11.75 and 12.00. Nonetheless, to find these supports you have to go back to 2003 and therefore they are not supports that can be relied upon to hold.
At this time, the sellers are feasting on this stock and the buyers are few and far between. With so much bad news and such clearly defined as well as attractive risk/reward ratios, shorting the stock seems to be the smart thing to do.
Sales of OSK between 16.00 and 16.20 and placing a stop loss at 16.60 and having a minimum objective of 13.75, offer 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). Rating would be higher if it wasn't because the stock is already at such a low price when compared to what it was trading at just 9 months ago.
RIO (Friday closing price 28.28)
RIO is a Brazilian stock that mines ore. During the last two months the stock has seen a strong drop in price due to a falling Brazilian stock market and a general decline in the price of commodities. In addition, RIO is growing and rapidly expanding and recently had an additional stock offering to raise capital for new acquisitions. The stock offering was fully subscribed but at an average price of around $28.70-$29 per share. That stock offering was the main cause for the recent drop in price.
Nonetheless, RIO is a large company that is rapidly becoming a world power and its likely that over the longer term the additional capital that was raised and future acquisitions that are likely to come soon, will help the company accomplish much higher valuations. In addition, even though the price of commodities has fallen recently, it is not likely that they will ever be at the same low prices as before. Because of this reason, companies such as RIO are not likely to stay down in price for very long.
On a weekly closing basis, support is now very strong at 27.71-27.78 from a double bottom that was built this past week when the stock was able to close above last week's close of 27.78. Intra-day support is also very strong at the most recent low at 26.26 and even stronger at the 100-week MA currently located at 25.50. In addition, support will also be found at the previous all-time high made last year in July at 25.97. On a weekly close basis, no resistance is found until 31.63 and even then that resistance is considered minor. Strong resistance will be seen up at the 50-week MA currently at 33.60. On a daily closing basis, resistance is found at the most recent high daily close of 30.71. Above that level there is no resistance of consequence until the 33.60 level is reached.
The stock was recently under strong selling pressure due to the additional stock offering that diluted the stock. Nonetheless, the additional income is being used to expand (not to solve economic problems) and therefore higher valuations of the stock price are to be expected in the future. The double bottom that was built this past week must be seen as a sign that the stock is not likely to go down much further. With all the strong support levels underneath, the stock will likely be supported at these prices, unless there is further negative fundamental news. In addition, the price of commodities in general, will likely continue to hold firm or rise, as inflation will not likely fall anytime soon.
Due to the strong drop on Friday and the close near the lows of the day, it is probable that RIO will see lower prices on Monday. Since the double bottom is on the weekly chart, drops below 27.71 intra-week will not affect the chart formation.
Purchases of RIO between 26.40 and 27.40 and using a mental stop loss down at 26.08 and having an objective of at least a rally up to 33.60 will offer a risk/reward ratio of at least 5-1.
My rating on the trade is a 7.5 (on a scale of 1-10 with the strongest probability rating being 10).
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Updates
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| Monthly & Yearly Portfolio Results
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Open Positions and stop loss changes
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| Status of account for 2007: Profit of $9758 per 100 shares after losses and commissions were substacted.
Status of account for 2008, as of 6/30 Profit of $971 using 100 shares per mention (after commissions) Closed out profitable trades for July per 100 shares per mention (after commission)
BA (short) $1369 AMZN (short) $126 NUAN (long) $63 AMZN (short) $548 AMZN (short) $666 EBAY (short) $134 ABB (short) $124 ' AMZN (short) $534 ANGO (short) $177 INTC (short) $335 NTES (short) $199 CMED (short) $256 HON (short) $59 BA (short) $308 JNPR (long) $25 ITG (long) $412 LEH (short) $241 NUAN (long) $254 PFE (long) $148 GIGM (long) $46 IR (long) $107 Total Profit for July, per 100 shares and after commissions $6131 Closed out losing trades for July per 100 shares of each mention (including commission)
RIO (long) $167
JNPR (long) $331 JNJ (short) $172 RIO (long) $141 GIGM (long) $57 VLO (long) $52 Total Loss for July, per 100 shares, including commissions $920 Open positions in profit per 100 shares per mention as of 7/31
FTEK (long) $153
Open positions in loss per 100 shares per mention as of 7/31VLO (long) $488 JBL (long) $50 AMZN (short) $1285 HON (short) $138 YGE (long) $317 Total $2331
CMED (short) $4 HPQ (short) $34 STP (long) $258 Total $294
Long-term open positions. Increase in equity from last month's close as of 7/31 YGE (long) $198 Total $198
Long-term open positions. Decrease in equity from last month's close as of 7/31
STP (long) $808
Status of trades for month of July per 100 shares on each mention after losses and commission subtractions. ELON (long) $70 Total $878
Profit of $6576
Status of account/portfolio for 2008, as of 7/31Profit of $7547 using 100 shares traded per mention.
NUAN broke and closed once again below the 100-week MA and seems to be hanging by a thread. With very strong weekly support close by at 15.02 it is evident that any further weakness this coming week could cause the stock to take a tumble. Below the recent weekly low close at 14.63, there is no strong support until the 200-week MA is reached down at 11.10. The previous major high weekly close at 13.46 is likely to offer some support, but previous highs are never as strong as support as previous lows, and therefore at risk of not holding up if the stock is under strong selling pressure. With the weekly close once again below the 100-week MA the burden of proof is in the hands of the bulls and it seems likely that without some strong fundamental news, that the bears will win. On a daily closing basis, the 14.54-14.73 level is of major importance. Any close below that level will bring in strong selling. At this time, only a close above 15.90 would relieve some of the selling pressure.
ELON had a very negative earnings report this week and the stock gapped down over $2. Nonetheless, it was surprising to see that the reaction was totally muted, as there was no panic selling or even major movement thereafter. Such reports usually generate follow through, but in the case of ELON the reaction after the first drop has been "nothing". It seems evident that the $10 level is one of great support but not an area that is generating bargain hunting either. At this time a close below $10 would be negative while a close above 11.23 a positive. There is nothing else to say about the chart at this time. STP continues to trade like a stock that is waiting for something to happen, in either direction. The trading on both sides seems to lack follow-through and therefore is basically direction-less. Some positive earnings news on a sister company FLSR failed to generate buying. On the other side of the coin, news from Spain regarding the subsidies the country was looking to cut, but decided not to, gave the stock a strong one-day rally, which it promptly surrendered the very next day. On a weekly closing basis, there is very strong support at 31.70 and major at 30.70. Resistance is strong at 36.24. On the daily chart, a close above 34.98 will likely generate a buy signal and a strong rally, while a close below 32.29 will likely generate a test of the support level at 31.70 and at 30.70. YGE I believe has turned the corner as the stock confirmed that last week's close at 14.93 was a successful re-test of the weekly closing support between 14.50 and 14.75. In addition, with the close on Friday above the previous weekly high close at 16.36 as well as a close above a previous weekly resistance level at 16.52 the stock gave a buy signal. Rallies up to an important weekly close resistance up at 18.38 are now probable. There is a clear obstacle on the daily chart with the previous daily close as well as the 50-day MA presently at 17.53. Nonetheless, if the stock is able to close above that level. ot should be clear sailing up to the 100-day MA at 19.13 and daily close resistance up at 19.51. There is no near-by and clearly established support level but the 15.50 area where the 20-day MA as well as a minor previous intra-day low is found, should work as support at this time. VLO had a slightly better-than-expected earnings report this week that generated a rally up and temporarily above the 20-day MA. Nonetheless, the stock failed to reach the previous high resistance at 36.30 and fell back under the 20-day MA once again. The stock was able to close on Friday above last week's close at 31.88 and gave notice that perhaps the stock has found at least a temporary bottom. The stock was unable to close above the most recent weekly high close at 33.10 so no buy signal was given. Nonetheless, the backing and filling action seen over the past 2 weeks seems to suggest the stock is close to generating a strong short-covering rally. Strong support, on a daily closing basis, will now be seen at 31.72 (31.30 intra-day). Resistance is strong at the most recent high daily close at 35.16 (35.27 intra-day). A close above or below either of these levels should generate further movement in that direction. FTEK gave signs that it may have found a bottom as the stock was able to close higher than last week and above the previous low weekly closes at 16.57. In addition, the higher close this week confirmed a successful re-test of the 200-week MA. Nonetheless, the stock failed to close above the 18.50 level where a buy signal would have been generated. On a daily closing basis, support will now be strong at 16.97 where to important previous closes as well as the 20-day MA are located. On a daily closing basis, strong resistance is found at 18.53 and again at 18.84. Stock does seem to giving notice that it has built a support basis and is trying to generate an up-trend. A break below 16.67 would negate that. AMZN confirmed that last week's close at 78.31 was a successful test of the major resistance level between 81.00 and 81.50. Nonetheless, the close at 75.75 was at the 20-week MA and still above a decent support at 74.78. Strong support, on a weekly closing basis, is found between 71.63 and 71.99. The stock did close below a couple of decent support levels, on a daily closing basis, at 75.98 and 76.15. Nonetheless, the close was only 20 points lower and that does not signify a decisive break of support, especially when the close on Friday was right at the 50-day MA. There is an open gap down at 72.07 that beckons strongly and will likely be a magnet this week if the indexes show any kind of weakness. There is minor resistance at 76.93 but other than that, there is no resistance of consequence on the intra-day chart until 79.00 is seen. Should the 71.66 level of support be broken, there is a strong likelihood of the stock dropping all the way down to 67.22. JBL gave a strong buy signal on Friday when it was able to close above the previous weekly closing high at 16.29 as well as above the 50-week MA. Nonetheless, the stock was not able to make a new intra-day high above 17.05 or close above the daily closing high made last week at 16.67 and therefore some questions remain unanswered. On a weekly closing basis, though, the stock has little resistance above until 17.85 is reached and even then, that level must be considered a very minor resistance. Strong resistance will not be reached until the 20.58 level is reached. At that price you find a major previous low weekly close as well as the 100-week MA. On a daily closing basis support will be found at 15.78 and a lot stronger at 15.52. Nonetheless, now that the stock seems to be committed to the upside, it should not close below 16.26 anymore, unless the stock is failing. The stock did have a classic reversal day with higher highs, lower lows, and a close above the previous days' high. Such a reversal should generate aggressive follow-through on Monday. A print above the previous intra-day high should cause the stock to move up to close a gap up at 17.91 and perhaps test the small intra-day double top up at 18.42. CMED this past week had one more unsuccessful stab at the 5-month high at 49.82. In addition, the stock was unable to close above an important weekly close resistance up at 47.58 and now has set itself up for making a strong decision either way based on the earnings report that is due out on Monday morning. Evidently if the earnings report is bearish and the stock closes below this week's close at 47.31, it will head straight down toward the 38.66-40.00 level where there is good support. There is also good support at 43.18, on the weekly closing chart. By the same token, a close next week above 47.58 will probably generate a move up to 52.19 where there is strong resistance. On a daily closing basis, there is a double top at 47.96 that if broken on Monday will probably be a catalyst for the upward move to the resistance up at 53.71. The stock is totally set up for consistent movement in whatever direction the earnings report generates. If the earnings report is bullish and the stock rallies on the opening on Monday, it should be liquidated. If the report is bearish, depending on where it opens, you can consider adding shorts. HPQ did go up this past week to the 200-week MA at 44.70 and though it was able to trade above it, in the end the stock closed below it. On an intra-week basis, the stock did get up to a minor resistance level on the weekly chart at 45.43 with a high of 45.39. The resistance level held well. On the daily closing chart, though, much more was accomplished as the stock tested successfully the 50-day MA currently located at 45.06. In addition, the stock closed on Friday below a decent support level, on a daily closing basis, at 44.27. Such a break seems to suggest a re-test of the 20-day MA and most recent low daily close down at 43.00. Intra-day drops as low at 42.50 could be seen. A close next Friday below this past Friday's close at 43.96 would be bearish and the strong support down at 41.58-41.88 would be at risk of being taken out. Such a break of strong support would likely generate moves down to the 200-week MA at $36. Any daily or weekly close above 45.06 would now be positive. HON has been able to generate a higher weekly close than the previous week for the last couple of weeks. Nonetheless, it has only been able to do it by about 20 points each time and therefore is showing that the short-covering rally is weak. So far, the stock has been unable to rally enough to re-test the previous low weekly close at 54.01. Such a failure seems to suggest strong underlying weakness. On a daily closing basis, though, the previous low close at 53.19 has been tested successfully with a recent high daily close at 52.73. In addition, that high daily close has also been successfully re-tested with a daily close at 52.43. In simple words, the stock has done just about everything it needs to do to the upside to re-test the major break of support seen several weeks ago and now looks like it needs to go back down and find where the strong support is now located. Even within the concept of the stock having found a low when it dropped down to 46.67, it seems likely the stock needs to go back down to at least the 48.43 level in order to give the chart a strong re-test of the previous low. Nonetheless, the recent low at 46.67 was not at a level of previous support and therefore not considered a strong support and is at risk of being taken out easily should the stock turn down. Major support is presently down at 45.35 where the 200-week MA is currently located, as well as a large area of previous congestion. On a daily closing basis, resistance is strong at 52.43 and support is strong at 50.03, a break above or below either of those two levels will likely signal further movement in that direction. With the stock having failed to rally above previous breakdown point, the probabilities favor the downside.
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1) JBL - Purchased at 15.76. No Stop loss at present. Stock closed on Friday at 16.64.
2) VLO - Purchased at 31.64. Averaged long at 30.97. Stop loss raised to 31.13. Stock closed on Friday at 32.95.
3) HPQ - Shorted at 44.37 and again at 44.89. Averaged short at 44.63. Stop loss lowered to 45.49. Stock closed on Friday at 43.96.
4) ELON - Averaged long at 12.41. No stop loss at present. Stock closed on Friday at 10.66.
5) PFE - Liquidated at 19.08. Purchased at 17.46. Profit on the trade of $162 per 100 shares minus commissions.
6) STP - Purchased at 36.04. Averaged long at 41.11 (3 mentions). No stop loss at present. Stock closed on Friday at 33.51.
7) NTES - Shorted at 23.37 and then again at 22.95. Liquidated at 23.16. Loss on the trade of $0 per 100 shares (2 mentions) plus commissions.
8) YGE - Averaged long at 19.156 (3 mentions). No stop loss at present. Stock closed on Friday at 16.73.
9) HON - Shorted at 52.22. Stop loss at 53.82 on a stop close only basis. Stock closed on Friday at 51.00.
10) GIGM - Liquidated at 13.00. Purchased at 12.40. Profit on the trade of $60 per 100 shares minus commissions.
11) NUAN - Liquidated at 16.83. Purchased at 14.15. Profit on the trade of $268 per 100 shares minus commissions.
12) FTEK - Purchased at 16.87. Stop loss raised to 16.67. Stock closed on Friday at 17.57.
14) IR - Liquidated at 37.02. Purchased at 35.81. Profit on the trade of $121 per 100 shares minus commissions.
16) LEH - Liquidated at 18.72. Shorted at 21.74. Profit on the trade of $302 per 100 shares minus commissions.
17) CMED - Shorted at 47.80. Now averaged short at 47.90. Stop loss at 49.36. Stock closed on Friday at 47.31.
18) AMZN - Shorted at 78.79. Now averaged short at 80.35 (3 mentions). Stop loss now at 79.95. Stock closed on Friday at 75.75.
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Encyclopedia of Chart Patterns. A must have for chart aficionados! |
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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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