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Issue #214 
February 20, 2010 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Indexes Break Resistances, Further Upside Likely!
DOW Friday closing price - 12273
The DOW continued its impressive run with yet another new 32-month weekly closing high. The index has been on a tear as 11 out of the last 12 weeks have been green. The index has now surpassed the Fibonacci 75% retracement level but also the "general" resistance level at 12300. This was accomplished in spite of several economic reports that came out worse than expected throughout the week. With no close-by resistance and momentum seemingly unstoppable, probabilities favor continued upside.
In looking directly at the charts of all 30 DOW stocks what stands out is a lack of resistance levels of consequence in their charts where selling could be expected. A total of 5 stocks (15% of the index) are at new all-time highs where resistance is non-existent. Even in the case of the most bearish of the DOW stocks (CSCO) the stock is sitting atop a major support level that goes back 10 years. From a technical and chart point of view, other than from an overbought condition, there is little ammunition the bears can use to make a case for shorting the index.
On a weekly closing basis, resistance is minor to decent at 12743 and decent to strong at 13058. On a daily closing basis, resistance is decent between12684 and 12743. Above that level, strong resistance is found at 13058. On a weekly closing basis, support is very minor at 11823 and decent between 11098 and 11101. On a daily closing basis, support is minor at 12226 and minor to decent at 11823, minor at 11731 and minor to decent at 11637. Additional support is minor at 11555/11565, and again at 11478.
The DOW does find itself in an "extreme" overbought" condition and still within the first quarter time frame (Jan 1st to March 1st) where a first quarter correction has started every year for the last 10 years. As such, the index still has another 6 trading days where the correction could begin to occur. Nonetheless, this is not a year in which normal trading guidelines (probability numbers) have been respected by the traders as the manipulation of the market by the Fed has made it a completely new game. Simply stated, the likelihood of a correction occurring this year has diminished.
The NASDAQ just finished making a new 10-year weekly close this past week and is now considered to be in a major bull-run if confirmed next week with another like close. As such, with the large bulk of buying being seen "recently" in the DOW, the probabilities have increased that the index may continue to outpace all other indexes at this time, just to catch up to the NAZ. If that is the case, and the first quarter correction does not occur this year, the probabilities are high that the index will reach 12700 to 13000 in the next week or two, where some decent resistance is found.
At this time, there is nothing in the chart of the DOW that points to a level close-by where selling could be seen. There are several economic reports of importance this week that could provide a catalyst for the correction to begin, but such an occurrence cannot be factored into the probability number.
As far as the downside is concerned, last week's low of 12193 has to be considered indicative support inasmuch as the DOW has not yet seen a lower low than the previous week in the last 12 weeks, with one minor exception in January when the index went below the previous week's low by 4 points . The bulls are totally committed to taking the index higher, especially with no resistance close-by above, and therefore should the 12193 level be broken by more than 5 points this week, it would be considered a strong signal that a correction is beginning.
If, in effect, the marketplace is in a major bull-run, such as is being shown in the NASDAQ, the DOW should continue to be the strong index this week. Some resistance will be found at the 12700 level, not only because there is some previous resistance there, but also because the index has "general" resistance 300 points above and below a major even number, such as 13000 is. As such, 12700 should be considered a level where the bears may step up again to try to stem the tide.
NASDAQ Friday closing price - 2833
The NASDAQ made a new 10-year weekly closing high this past week, surpassing the 2007 bull-market weekly closing high at 2810. The index has not yet broken above the intra-week high seen in 2007 at 2861, but has not shown the kind of volatility or selling that would suggest that level will stop the advance.
Several of the big stocks in the NASDAQ, such as AAPL and NFLX continue to make new all-time highs and show no signs that their upside runs will stop anytime soon. As such, the probabilities of the index getting above 2861 and heading up to the 2900 to 3000 levels have increased.
On a weekly closing basis, resistance is minor to decent between 2864 and 2887, minor at 2917, and then nothing until minor resistance is found at 3205. On a daily closing basis, resistance is major at 2859 and then nothing recent above. On a weekly closing basis, support minor at 2686 and then nothing until decent support at 2518. On a daily closing basis, support is very minor at 2804 and again at 2789, decent between 2686 and 2689, minor at 2652 and minor to decent at 2617. Below that level, support is minor to decent at 2495 and decent to strong between 2460 and 2468.
On a weekly closing basis, the NASDAQ has been able to close above all resistance levels even going back to some minor ones back in July 1999. On intra-week, or even on a daily close basis, though, the index has not yet broken above the levels seen in 2007 at 2861, in 2001 at 2897, and in 1999 at 2871. As such, it can be said that there is still some chart resistance above. Nonetheless, with the exception of the 2861 level in 2007, the resistances from 2001 and 1999 are too far away for the traders to consider, and even then those resistance levels were never more than minor ones. As such, if the index is able to get above 2861 and close above 2859 this coming week, the probabilities of a run to the psychological resistance at 3000 would increase strongly.
On a negative note, though, in spite of the DOW having a very positive day on Friday (all day firmly in the green), the NASDAQ traded quite a bit of the day in the red and even though the close did end up green, it was by a small margin. This suggests that some selling of consequence was being seen on Friday.
Having generated a new 10-year weekly closing high has to be considered a major accomplishment as it suggests that the NASDAQ, and its stocks in general, are in better condition than they were at the top of the last bull market in 2007. Such a positive weekly close indicates that the index could continue substantially higher as the resistance levels above, prior to 5000 level seen in the year 2000, are all minor until the 4000 level is reached. As such, strong buying should be seen this coming week if the index is, in effect, a new major bull market.
It is evident, then, that that the daily close at 2859 (2861 intra-week) will be the most important level the bears can depend on to make a stand. It is the "last" chart resistance level where traders can hope to get a concerted attempt at selling "in unison". Above that level, there is no level, with the possible exception of the psychological resistance at 3000 that the bears can depend on to defend intelligently as a group.
To the downside, things are not very clear. Certainly a close next Friday below 2810 would be considered a possible failure to follow through, but on an intra-week basis the NASDAQ would literally have to negate the possible flag formation on the weekly chart that was broken the previous week and that has as an objective a rally up to 2967. In order to negate the flag, the index would have to drop below 2755. As such, even if the index closes next week below 2810, no true negative signal would be given until the index trades below 2755.
It should be noted, though, that the bulls are totally committed to making a new 10-year intra-week high this week or at least confirming the new weekly closing high with another close above 2810 next Friday. As such, any drop below last week's low at 2798 would be considered a sign that confirmation will not occur.
SPX Friday closing price - 1343
The SPX also made a new 32-month weekly closing high this past week but continues to lag behind the rest of the indexes as the financials remain the industry with growth problems. Nonetheless, the index shows no resistance close-by above, suggesting that further upside is forthcoming and a rally up to the 1400 level will occur. It is important to note that the market still continues to view the SPX as the primary index to watch and follow, though in the last 2 years that has not truly proven to be correct.
The SPX did reach the 75% Fibonacci retracement level this past week with a daily and weekly close above 1342. If, in effect, the traders are still using this index as their main indicator, the Fibonacci retracement numbers might be more appropriate in this index than in the DOW which reached and surpassed its 75% retracement last week. As such, it is possible that this index could be the one the bears will use to defend the possibility of the rally being a bear market correction as the index should not go above 1348/1350 if the Fibonacci number is to be valid.
On a weekly closing basis, resistance is minor to perhaps decent at 1395 and decent to perhaps strong at 1425. . Above that level there is no resistance of consequence until the 1400 level is reached. On a daily closing basis, resistance is minor at 1380, minor to decent at 1395, and decent to strong at 1425. On a weekly closing basis, support is minor 1276, minor again at 1236 and decent at the 200-week MA, currently at 1190. Below that level there is no support until the 50-week MA is reached, currently at 1121. On a daily closing basis, support is minor at 1328, 1320, minor again between 1299 and 1304, decent at 1267 and minor again at 1255. Below that, there is minor support at 1235, very minor at 1223 and decent to perhaps strong between 1178 and 1184.
The SPX shows no resistance of consequence above until the 1396 to 1400 level is reached. The only level that can be considered interesting is the 75% retracement number intra-week at 1348. Other than that, there is nothing in the chart where the bears could gather to sell as a unit. As such, reaching the 1400 level, where there is some decent previous resistance, is a high likelihood. By the same token, the index, much like the NASDAQ, saw quite a bit of red on Friday in spite of the strength in the DOW and only managed to close in the green by a couple of points, suggesting that further upside is not going to be easy.
The SPX has shown higher lows continuously for the last 12 weeks so any divergence from that, such as going below last week's low at 1324, would have to be considered a sign that a top to the rally has been found. Nonetheless, the index did close on the highs of the week, as the other indexes did as well, and further upside is the high probability for this week.
The indexes are running away to the upside in what seems to be a major bull market. Some negative economic indicators seen this past week were unable to put a dent in the rally and the positive ones that came out fueled further buying. The volume continues to be anemic and that means that there is still a lot of money on the sidelines. The question now is whether the now confirmed high probability of a major bull market being in effect will bring that money in to participate or not. So far, the answer to that question has been "no". Nonetheless, without that participation, further upside still seems a high probability, with additional participation further upside could become a runaway freight train.
There are a fair number of economic reports due out this week but none seem to be the kind that could be a major catalyst, so once again probabilities favor the upside. Nonetheless, there are only 6 trading days left to fulfill the 10-year trend of a correction being seen in the first quarter of the year beginning no later than March 1st. As such, this coming week promises to be suspenseful for that reason alone.
Inflation seems to be the growing concern as the only possible thing that could curb the bullishness being seen. By the same token, those inflation reports came out this week and were not enough to cause any kind of new selling to come in and having to wait another 4 weeks for the next batch of inflation figures to come out, suggests that no selling will be seen at this time for that particular reason. As such, the probabilities strongly favor further upside this coming week.
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Stock Analysis/Evaluation
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CHART Outlooks
The indexes were able to accomplish getting above resistance levels of some consequence over the past 2 weeks and further upside is the most likely scenario as no resistance is found and the momentum is strong. Nonetheless, finding stocks that offer good risk/reward ratios, small risk factors, and high probability ratings has been difficult. Chasing stocks is never a good idea, no matter how good the chart looks.
I did find 3 stocks that do fit into those categories and those will be the buy mentions this week. One of the stocks is not generally sensitive to the indexes, and therefore has a bit higher probability number.
I also have one sell mention this week in a stock that is not sensitive to the U.S indexes, either to the upside or downside. The chart picture there is also clear and does offer a good risk/reward ratio as well as a decent probability rating.
PURCHASES
WDC - Friday closing price - 33.24
WDC made a new all-time weekly closing high at 45.82 (intra-week at 47.44) in Nov09 but was not able to continue to build on that new high and gave a failure-to-follow-through signal in May10 when the stock closed below the previous all-time weekly closing high at 38.93 (intra-week at 40.00). The failure to follow through signal generated a drop in price all the way down to 24.46, in the process breaking below the 50-week MA and dropping down to, and slightly below the 200-week MA.
In August of last year, WDC began the recovery from the 24.46 weekly closing low and 4 weeks ago was able to break above the 50-week MA, convincingly, for the first time in 10 months. The stock has fallen back during the past 2 weeks to retest the breakout of that line and now finds itself at that level, with a short-term uptrend in place, and with a small risk factor. Testing of the first all-time high at 38.93 (40.00 intra-week) seems to be the prime objective of this rally.
On a weekly closing basis, resistance is minor at 34.76, minor to decent at 35.68, decent at 36.21 and strong at 38.93. Above that level, strong resistance is found at 44.71 and major resistance at 45.82. On a daily closing basis, resistance is minor at 34.79, minor to decent at 35.68, and decent at 36.39. Above that level, there is no resistance until decent resistance is found at the $40 level. On a weekly closing basis, support is minor at 32.58 and strong at 31.51. On a daily closing basis, support is minor at 32.56 and strong between 31.38 and 31.51.
Having broken above the 50-week MA 4 weeks ago, for the first time since May10, and now in the process of retesting that line as well as the strong support down in the mid 31's, WDC seems to be stating that with the index rally in effect that the recent uptrend is likely to continue and that the high seen on June 5th 2008 at 39.95 is the main objective. The stock already got above that high in Dec09, generating a rally up to 47.44 so with the probable help from the indexes there doesn't seem to be any particular reason the stock will fail in that quest.
WDC is showing a very bullish pennant formation on the weekly chart with the flag pole being the rally from the 23.80 low to 34.79 where the 50-week MA was trading at that time. The pennant has been the trading range during the last 13 weeks between a high of 36.79 and the low of 31.35. The key to the pennant formation has to be the 50-week MA, currently at last week's low of 32.60. The objective of the pennant if the top is broken (top at 36.79) is 43.31.
WDC saw selling coming in the first week of April after the stock failed to follow through on the break above the previous high at 35.92 (had rallied up to 36.79). The failure to follow through caused the stock to fall over a period of 10 trading days to Friday's low at 32.58. Nonetheless, at that price the 100-day MA was reached and a bounce on Friday from its lows as well as a close near the highs of the day, suggests that no further downside will be seen and that the retest of the 50-week MA is likely to be successful. If that is the case, the stock should now resume its recent weekly uptrend with the $40 level as the objective.
Purchases of WDC between 33.14 and Friday's closing price of 33.24 and using a stop loss at 31.25 and having an objective of a rally up to 39.95 to 40.76 will offer a 3.5-1 risk/reward ratio.
My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the strongest).
ELON Friday closing price - 8.98
ELON has been trading between a high of $15 and a low of $5 for the past 2 years, with the $10 level being a major pivot point during that time. Nonetheless, since the stock saw its 4.92 low in November 2008, each subsequent major low has been higher than the previous one and with the indexes now seemingly on a bull trend, probabilities favor a move back up to the $15 level in the near future.
In addition, since ELON last saw the $15 level in Oct09, and then fell down to a low 6.85 in Feb10, the stock has tested that low repeatedly successfully, suggesting that a rock bottom has been built and that the stock is ready to attempt a rally back up to the $15 once more.
On a weekly closing basis, resistance is decent to strong between 10.46 and 10.61. Above that level, minor resistance is found at 11.96 and then nothing until strong resistance is reached up at 14.40 to 15.31. On a daily closing basis, resistance is minor at 9.40, minor to decent at 9.84 and decent up at 10.61. On a weekly closing basis, support is minor 8.86, again at 7.87 and decent to strong at 7.05. On a daily closing basis, support is minor at 8.98, minor to decent at 8.86, and again at 8.66.
ELON shows a breakaway gap between 8.08 and 8.22 and a runaway gap between 8.75 and 8.77, which the traders attempted to close 3 weeks ago but failed. The gap formation gives extra added strength to the belief that the stock is ready to move higher from these levels.
In addition, ELON broke above the 200-day MA, currently at 8.60, in November and now shows 3 months trading above that line. Based on the current situation with the indexes, it is highly unlikely that line will be broken at this time. With the stock trading just below the $9 level and having important support close-by, even if the $10 level is the short-term objective, the risk/reward ratio and probability ratings are very good.
The biggest question mark with trading ELON is the time frame involved in a break above the $10 level. For the past 13 months the stock has been unable to break above 10.75 or break below 6.85, and the probabilities favor that trend continuing for several more months. Nonetheless, so much work has been done on building a support base at $7 and more recently good work has been done at 8.75, that the time frame of a breakout could be accelerating.
Should the stock get above 10.75, a rally up to $15 will be a high probability. In addition, if another rally up to $15 does occur, the fact that multiple highs at that level have been seen suggests the next time around the stock would likely end up going higher. As such, purchase of the stock could end up being a long term home run.
On the downside, the support at 8.75 and even more likely at 8.60 should not be broken if the stock is in effect ready to move higher. With the indexes on a roll, that scenario seems highly probable. As such, purchase of this stock at these levels offers excellent probability numbers and good to great risk/reward ratios. The only requirement likely to be needed is patience.
Purchases of ELON between Friday's closing Price of 8.98 and down to 8.86 and using a stop loss at 8.45 and having a minimum objective of 10.76 will offer a 3.5-1 risk/reward ratio. Nonetheless, if 10.76 is broken (good possibility) rallies up to $15 should be seen, taking the risk/reward ratio up to 12-1.
My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the strongest).
LVS Friday closing price - 47.76
LVS got into a major uptrend that started at 1.38 on Mch08 and that topped out on Oct10 at 55.47. The stock was able to break above the 200-week MA on that rally and since then has been able to hold above that line consistently during the past 16 weeks, suggesting that the action has simply been a pause in the rally before continuation of the trend begins.
With the indexes seemingly in a bull trend, the probabilities suggest that further upside will be seen in the stock. In addition, LVS has built a powerful flag formation on the weekly chart that if broken (a rally above 50.65) offers an objective of $95.
On a weekly closing basis, resistance is minor to decent between 49.89 and 50.06, decent at 51.95 and again at 56.30. Above that level, there is no resistance until decent resistance is found between $75 and $79. On a daily closing basis, resistance is minor at 48.91, minor to decent at 50.28, at 50.60 and again at 51.34, and decent to strong at 52.80. On a weekly closing basis, support is decent to strong at 45.35. Below that minor support from the 100-week MA is found at 43.80 and then nothing until decent support is found at 34.09. On a daily closing basis, minor to decent support is found at 46.03, at 45.04 and again at 44.38. Decent support is found at 42.47.
It is evident that during the past 16 weeks LVS has been treading water trading between a low of 41.70 and a high of 55.47. Nonetheless, each subsequent high has been lower and each subsequent low has been higher, generating a flag formation that promises to be explosive whichever way the stock decides to go. In addition, the volatility that has been seen during the past 16 weeks suggests that something of consequence is about to happen.
It should be mentioned that LVS saw a high of 148.76 at the height of the last bull market in Oct07 and therefore with the stock trading presently under $50 and with many other stocks and indexes making new all-time highs, it can be said the stock is cheap at these levels and has a lot of room to the upside to rally.
The fact the stock has maintained itself above the 200-week MA during these 16 weeks also suggests that the outcome will likely be to the upside, unless the indexes decide to take a big fall or some unexpected negative catalyst comes out. Neither of these options is likely to occur.
On a support basis, the most recent intra-week low is at 45.65 and that is also where the 50-day MA is presently found. Not having broken below the 50-day MA since Mch09 that line seems to be very strong support at the present time. In addition, there is strong weekly close support in the form of a double bottom at 45.35 that is unlikely to be broken or seen again. Such a chart scenario suggests that the upside is the most likely outcome with the possibility of strong price moves to be seen.
As far as resistance is concerned, the $50 level certainly can be considered decent psychological resistance as well as the recent high at 55.47. Above that level, there is decent resistance from Aug08 at 59.17 but above that little resistance is found until the $80 level is reached.
Purchases of LVS between 46.88 and 47.60 and using a stop loss at 44.10 and having an objective 79.00 will offer a 6-1 risk/reward ratio.
My rating on the trade is a 4 (on a scale of 1-5 with 5 being the strongest.
SALES
SNDA Friday Closing Price - 43.46
SNDA is an entertainment media company in China that engages in the development and operation of online games. The stock saw an all-time high made in May09 at $65 and then got into a downtrend for the next 14 months that culminated in a low of 36.33 in Jul10. Nonetheless, for the past 12 months the stock has basically been trading sideways with $46 being the upside parameter and $40 being the pivot point.
SNDA had a strong pop in price 2 weeks ago when it broke above the 200-day MA that was at 40.50 at the time as well as above a decent resistance level at 41.60 and ran up to the 45.57 level ($4 higher) in a period of 48 hours. The rally was not based on news but mostly on breaking chart resistances and therefore susceptible to chart resistances above. The rally took the stock up to the 100-week MA, at that time at 45.60, and stopped, causing the stock to fall back consistently over the next 5 trading days, suggesting that the selling at that level is of consequence.
On a weekly closing basis, resistance is decent at 45.39. Above that level resistance is decent again at $50. On a daily closing basis, resistance is decent at 45.00 and decent to strong between 45.34 and 45.96. On a weekly closing basis, support is minor at 40.93, decent at 39.73, and decent to strong between 37.39 and 38.00. On a daily closing basis, support is minor at 42.68, minor to decent at 40.40, and decent at 39.74. Below that level, support is decent at 38.35, at 37.39 and at 36.91.
SNDA likely found a bottom when it dropped down to 36.33 and is likely to be in a base building mode from which ultimately the stock may end up moving higher. Nonetheless, the stock has traded in a well-defined trading range over the past year with 46.34 being the high parameter and 36.33 being the low parameter. Within that trading range, the 100-week MA, currently at 46.20 and the 200-week MA, currently at 37.60, seem to be the bookends to the range presently. The probability of the stock continuing to trade in that slight upward channel is high.
On the weekly chart, SNDA shows a spike high the previous week after the breakout of the 200-day MA. Nonetheless, there was no follow through to the spike this past week as the stock had an inside week with lower highs and higher lows. The probabilities do favor a rally this week back up to the most recent high at 45.57 or even up to the 100-week MA which is now at 46.20 (was at 45.60 2 weeks ago). Nonetheless, the decent to strong resistance at 46.34 as well as the top of the 100 to 200 week MA channel at 46.20 should be resistance that is highly unlikely to break at this time. In addition, the stock does show quite a bit of resistance starting at 45.16 and up to 45.57.
SNDA reports earnings on March 2nd and as such any sales should be done with that in mind. Nonetheless, during this past year the stock has already seen 3 previous earnings reports and none were the cause of a strong rally, and therefore the probabilities do not favor this particular earnings report as being particularly risky. On the other side of the coin, if the report comes out as expected or worse, drops back down to the $40 level will be highly probable.
To the downside, drops back down to the 200-day MA, currently at 40.40 are likely to be seen. In addition, should the earnings report show any weakness, drops down to the 200-week MA, currently at 38.00 could easily happen as the stock does seem to be in that trading channel between 100 and 200 week MA's.
Sales of SNDA between 45.16 and 46.20 and using a stop loss at 46.47 and having a minimum objective of 39.70-40.30 will offer a 4 to 5-1 risk/reward ratio.
My rating on the trade is a 3 (on a scale of 1-5 with 5 being the highest).
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Updates
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| Updates on Held Stocks |
Closed Trades, Open Positions and Stop Loss Changes |
| DCTH had an inside week trading within the range seen the previous week as the traders await the announcement from the FDA that the company has been given fast-track approval. The stock did try to close above the previous 8-month high at 11.44 on Friday as it traded above that number most of the day, but with no news the bulls were unable to hold that level and the stock closed below the previous high close. From a chart perspective, the inside week suggests that further upside should be seen this coming week, but much will be dependant on how the news is received. Many believe that the news will cause a selloff due to the adage of "buy the anticipation, sell the fact". Nonetheless, in this particular case that may not happen as the news is likely to lead to further anticipation of the positive results that will be seen when the medicince is released to the public. Resistance is at 11.88 and support at 10.69. Any break above or below either of those 2 levels is likely to stimulate further movement in that direction. FCEL tried to get above the $2 level 2 weeks ago but failed and in the process the stock broke below the 50-day MA and is now under short-term selling pressure. The stock now shows multiple bottoms between 1.75 and 1.79 increasing the probabilities that the level will break. On an intra-week basis, the stock shows decent support at 1.66 and again at 1.50-1.55 where the 200-week MA is currently located, and therefore even if the 1.66 level breaks the stock does not have much to fall. Any close above $2 would signal that the recent uptrend has started anew. Nonetheless, at this time the probabilities favor further downside. SVNT has been straddling the $10 level for the last week but has been unable to establish a foot-hold above the strong psychological resistance at $10. Nonetheless, the bears have also been unable to generate any selling of consequence as the stock shows decent intra-week support at 9.81 and that level held up well this week. Further movement in the stock will likely need some additional news above and beyond the fact the company has now been able to get the financing they need to move forward. By the same token, the probabilities of that happening are much greater than those of negative news coming out. Any rally and close above 10.30 will likely bring in new buying. Any daily close below 9.49 would likely stimulate new selling. Probabilities favor more of the same for the time being. This is not a stock that is likely to be affected either way by what the indexes do. SKX reported lower than expected earnings this week and the stock got slammed in after-hours trading. Nonetheless, the stock recovered intra-day to generate a strong rally and a reversal type of day with higher highs and lower lows than the previous day. By the same token, the bulls were also unable to turn the day into a positive reversal when the stock closed 1 point lower, turning the reversal into a non-event. The stock can be susceptible to what the indexes do but on Friday, in spite of the rally in the indexes, the stock fell and closed below the 50-day MA, currently at 21.90. It was the first time the stock has done that in the last 3 weeks, suggesting the stock is about to renew its weekly downtrend. Support will be found at 20.64 (last week's low) and at 20.55 which has been the most recent low seen in the last 4 weeks. Additional support is found at 19.22 where a previous intra-week low of consequence is found as well as the 100-day MA. Any daily close above 22.56 or intra-week rally above 23.25 will likely generate further upside. Stock shows multiple bottoms between 19.11 and 19.27 and if the stock gets below 20.55, breaking that multiple bottom will be the target of the traders. The following update is for those holding the stock. I am not presently in the stock at this time. AMZN has built a double top on the weekly closing chart having closed in the red on Friday. Mid January's close at at 188.85 and the previous week's close at 189.25 is what comprises the double top, as well as January's intra-week high at 191.60 and last week's high at 191.40. As such, the probabilities now favor the stock heading lower even if the indexes head higher. By the same token, the double top will need to be confirmed this week with another close below 188.85 next Friday as well as with an intra-week break below last week's low of 185.15. Should the confirmation occur, drops down to the 20-week MA, currently at 175.60, will likely be seen. Decent to strong support is found at 166.90. If broken, drops down to $150 will likely occur. Stock shows some near-by support at 182.51, but as far as resistance is concerned, there is only very minor daily close resistance at 187.76 and no intra-week resistance, other than psychological one at $190, until the recent highs at 191.40/191.60 are reached. With the indexes likely to go higher this week, this will be a pivotal week for the stock. By the same token, this is not a stock that will necessarily follow what the indexes do.
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1) GE - Covered shorts at 21.41. Averaged short at 16.48. Loss on the trade of $986 per 100 shares (2 mentions) plus commissions.
2) DCTH - Averaged long at 7.50 (2 mentions). No stop loss at present. Stock closed on Friday at 11.30.
3) FCEL - Purchased at 1.23. No stop loss at present. Stock closed on Friday at 1.80.
4) SVNT - Purchased at 9.50. Stop loss at 8.96. Stock closed on Friday at 9.98.
5) DD - Shorted at 54.35 Averaged short at 52.085. Covered shorts at 55.33. Loss on the trade of $649 per 100 shares (2 mentions) plus commissions.
6) CAT - Covered shorts at 104.52. Averaged short at 92.005. Loss on the trade of $2505 per 100 shares (2 mentions) plus commissions.
7) MMM - Covered shorts at 92.82. Shorted at 87.21. Loss on the trade of $561 per 100 shares plus commissions.
8) HD - Covered shorts at 38.19. Shorted at 35.40. Loss on the trade of $279 per 100 shares plus commissions.
9) SKX - Shorted at 23.43. Stop loss at 23.85 (hard). Stock closed on Friday at 21.63.
Previous Newsletters
View Jan, 23 2010 Newsletter View Jan, 30 2010 Newsletter View Feb 6, 2010 Newsletter View Feb 13, 2010 Newsletter
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Encyclopedia of Chart Patterns. A must have for chart aficionados! |
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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