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Issue #229 
June 05, 2011 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Indexes Give Sell Signal, Confirm Seasonal Correction has Started!
DOW Friday closing price - 12140
A failure to follow through signal was generated this past week in the DOW after the index closed below the previous 34-month weekly closing high at 12391 seen the second week of February of this year. The failure to follow through signal means that at least a temporary top to the most recent 1-year up-trend has been found and that the seasonal correction has started. A 6-12% correction is the norm, unless this is not a correction but the beginning of a downtrend. Drops down to the 12000 level would likely be the minimum to be expected, which would be a 7% correction from the 12875 high seen 5 weeks ago.
Nonetheless, the DOW did generate an anomaly this past week with the 5th red weekly close in a row, which has not happened since Oct02. In addition, the index did have a classic reversal week going above last week's high and closing below last week's low, suggesting that further downside is expected to be seen this coming week. Both of these events could be ominous signs for this coming week, especially since there are no economic reports that could be a positive catalyst.
On a weekly closing basis, resistance is decent at 12810. On a daily closing basis, resistance is minor to decent at 12383 and again at 12605. Above that level, resistance is very minor at 12695, minor to decent at 12760 and decent at 12810. On a weekly closing basis, support is at decent at 11858/11893 and minor to decent at 11092/11100. On a daily closing basis, support is minor at 12058, minor again at 11823, and strong support at 11613.
The DOW had a strong down week not only giving a failure to follow through signal but closing below the 20-week MA (currently at 12270) as well as below the 100-day MA (currently at 12250). The close below both of these lines opens the door for drops down to the next level, which on the daily chart would be the 200-day MA, currently at 11645, and on the weekly chart would be the 50-week MA, currently down at 11450. Of course, drops down to those levels is not expected to be seen this coming week, but as possible downside objective of the seasonal correction period, likely to last another 4-6 weeks at least.
Nonetheless, though follow through to the downside is expected to be seen this coming week, there is good reason to believe that the DOW will find some decent support down in the 12000 level demilitarized zone (11970 to 12030), at least for a week or so. The index did trade between 11983 and 12258 for a period of 7 trading days back in late February and early March and with the fact the index is now oversold and facing a week where there are no economic reports that could serve as a positive or negative catalyst, it is likely the traders will stay in a chart trading range that makes technical sense. Intra-week lows of 11983, 12018, and 12041 were seen in that period of time and the same kind of scenario could be seen over the next week and a half. Some decent buying is expected to be seen at the strong 12000 psychological support level and bounces off of that are expected. In fact, with the index now showing 5 red weekly closes in a row, the chances of a green close next Friday are decent.
As far as resistance is concerned, the probabilities do favor the DOW getting back up and closing around the 100-day MA at 12250 at some point this week. Nonetheless, that area will now be considered strong resistance inasmuch as the index shows 3 previous high daily closes at 12214, 12226, and at 12258 in late February and early March as well as a previous low daily close of importance at 12201 seen in April, giving that area not only resistance from the 100-day MA, but also from several previous high and low daily closes. In addition, all the recent economic fundamental reports have come out negative leaving the bulls with no ammunition with which to break such a decent chart resistance level.
The DOW now finds itself in an oversold condition, facing a 7% correction from the highs, and near a strong level of support. All of these are reasons why the index could see a week in which two-way trading is seen, with Friday's close at 12140 being somewhat a pivot point for the week. This is still a marketplace that has a lot of long-term bulls that were expecting a correction but were planning to buy such a correction for a resumption of the uptrend to begin sometime between late July and early October. Buying around the 12000 level is something that will make sense to the bulls, especially since no negative catalysts are likely to be seen this coming week.
The DOW will continue to be under selling pressure as the bulls are not likely to be aggressive buyers, especially on rallies. The index did close on the lows of the day and of the week on Friday, and follow through to the downside will likely be seen on Monday. Nonetheless, with Friday's close likely being a pivot point for the week, volatility could be seen every day this week, with drops down to 12000 being bought and rallies up to 12250 being sold. Possible trading range for the week is 11983 to 12258.
Ultimately, though, based on the slowdown in the economy and this being the first move down of consequence, further downside is likely to be seen over the next 2 months, with 11550 likely being the main downside objective. Such a move down would mean the DOW would experience a 10% correction, which is a rational expectation. If the slowdown in the economy is worse than anticipated, the correction could end going lower. For now, though, that will be the target are for the correction, to be reached likely in July or August.
NASDAQ Friday closing price - 2732
The NASDAQ gave a small sell signal on the weekly closing chart this past week, having closed below a minor previous weekly closing low at 2764. In addition, the index had a classic reversal week with higher highs and a lower close than the previous week's close. Not only was the reversal bearish, but a successful retest of the recent highs at 2887 was given with this past week's high of 2835, fulfilling all the needs to the upside for allowing a strong correction to begin.
The NASDAQ has now confirmed without a shadow of a doubt that a failure to follow through scenario is in effect and that the seasonal correction is under way. Drops of anywhere from 7% to 12% are likely to be seen. A 7% correction will put the index down to 2684, while a 12% will bring 2540 into view.
On a weekly closing basis, resistance is decent at 2810 and decent to strong at 2873. On a daily closing basis, resistance is decent at 2798/2799, minor at 2823 and at 2833. Strong resistance is now found at 2871/2873. On a weekly closing basis, support is minor to decent at 2686 and decent 2643. Below that there is now support until the low 2500's are reached. On a daily closing basis, support is minor 2722 and minor to decent at 2686. Decent support is found at 2612.
The NASDAQ did break both the 50 and 100 day MA's and did close on the lows of the day and the week on Friday and follow through to the downside is expected with 2705/2706 being the first objective possibly to be seen Monday. At that level there are 2 previous intra-week lows as well as 2 previous daily closes at that price, giving that level the tag of decent support. Nonetheless, the reversal action this past week, as well as the close on the lows of the week, could give the bears some strong momentum and if that happens the index could get down to the second and stronger support at 2676, though breaking that level seems improbable this week.
To the upside, the 2770 level (100-day MA) and the 2776 level (20-week MA) will be resistance and likely strong. Based on the action this past week as well as on the fundamental news, it is unlikely that the index will get above 2770/2776 until the seasonal correction is over. Nonetheless, the probabilities are decent the index will get up to that level at some point this week, and perhaps even close there, as a retest of the breakdown point is always a likely scenario before further downside of consequence can be seen.
With no fundamental catalysts scheduled for this week, the bears are likely to be in control until one of the supports mentioned above is reached. The big question mark is likely to be whether the 2705 level of support holds up or whether there is a bit more weakness than anticipated and 2676 is reached. Either way, once the follow through selling is over from the negative news of past week, the bulls are likely to try once again go "right the ship" and rally the index. Possible trading range for the week is 2705 to 2770, or 2676 to 2770.
SPX Friday closing price - 1300
The SPX, like all the other indexes, had a classic reversal week making higher highs and closing below the previous week's low. The high for the week at 1345 will be considered a successful retest of the 30-month high seen a few weeks ago at 1370. Nonetheless, the 1345 high also has added meaning inasmuch as it was the previous high prior to the rally to 1370 as well as the 75% Fibonacci Retracement level, giving the action seen this past week added bearish connotations.
The SPX was able to close at the psychological support at 1300 but the bulls were all out at the end of the day on Friday to keep it from closing lower, suggesting that without any positive fundamental news on Monday that lower numbers will be seen. This is especially true since 1300 is only a psychological support and psychologically the bears are now in control. Additionally, the actual support on a weekly closing basis is not at 1300 but at 1279, as such the probabilities of the index heading lower next week are high.
On a weekly closing basis, resistance is minor at 1343 and decent at 1363. On a daily closing basis, resistance is minor at 1316, minor to decent at 1332/1325 and decent at 1343/1345. On a weekly closing basis, support is minor to decent at 1319 and decent between 1276 and 1279. On a daily closing basis, support is minor to decent support is found at 1276, and decent to strong at 1256.
The bears were very successful this past week in breaking many support levels of decent importance in the SPX, starting with the 50 and 100 day MA's currently at 1318 and 1330, as well as a previously important daily close support at 1305/1306. In addition, the reversal week (which tested the 1370 high successfully) and close on the lows of the week now gives the bears control of the trend, at least on a short term basis.
There is now no intra-week support of consequence until 1249 is reached. That level was an important spike low in the second week of March and a level that the bulls will evidently try to defend strongly. There is some minor support at 1294 but having closed on the lows of the week and follow through expected to be seen in all the indexes, the likelihood of that support holding up is minimal. Below that level there is nothing until 1249, as such the SPX could end up being the weak sister this coming week as chart-wise speaking it is the index with the least support nearby.
To the upside, the 100-day MA is currently at 1316 and with several previous daily closing highs around 1319, it is likely to be a strong resistance area that will not break, though a rally and close up at that level could be seen by next Friday as a retest of the breakdown point.
The SPX could be the leader and catalyst to the downside this coming week. Not only is the chart picture short-term kind of dire, but the economic problems in Europe continues to dominate the news. It is possible this index could pull the other indexes down much more than anticipated in this newsletter as a drop down to 1250, which could happen, would likely drag the DOW down 400-500 points, destroying the short term decent supports in the index.
Nonetheless, on an intra-week basis and on the daily chart the SPX does show a bit of support at 1275, making the probable trading range for this coming week to be between 1275 and 1316. As with the other indexes, weakness should be expected early in the week and some rally back up to test the 100-day MA late in the week.
Very definite bearish signals were given this week confirming that a temporary top to the 1-year rally has been found and that the seasonal May-Oct correction is now well on the way. It is interesting to note, though, that talk of a double dip recession is starting to re-surface based on the economic slowdown numbers that have started to be seen, suggesting this could end up being more than a correction but the start of a downtrend. GDP is being revised downward almost every month and Job creation has slowed down to a trickle meaning that if the trend continues the economy will be "shrinking" not just going to a slow-down period.
Hanging over the market is the possible default in Europe by Greece, with Portugal and Spain possibly following thereafter. The problems that created the previous recession and major drop in stock prices has not been resolved, just put under the rug, and that is something that could start coming back out. In addition, the Fed injection of money was the main reason for the recovery and rally seen in the last 3 years and economically and politically it is getting harder for them to continue to support the market by printing and giving money away to banking and financial institutions, putting the possibility of the Fed support no longer being there. The increasing collection of negative events, in conjunction with a very reliable seasonal correction, might be a catalyst for a double dip recession occurring.
This coming week will be all technical trading unless something unexpected happens in Europe. There are no economic reports of consequence and the market will likely be traded more off of charts than anything else, as nothing tangibly new is likely to be seen. As such, the week is likely to be dominated by traders trading support/resistance levels. In the case of all the indexes the closing price on Friday is about midpoint between support and resistance, which likely means a lot of both red and green will be seen during the week. Expect red first, though.
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Stock Analysis/Evaluation
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CHART Outlooks
The indexes have now established that they are on the seasonal correction phase having broken important support and MA lines this past week. Further downside is expected to be seen over the next 4-8 weeks. Nonetheless, the indexes are presently oversold and nearing the first support levels of consequence and the possibilities of a bounce from those levels occurring this week, at least by the end of the week, are high. Certainly, retesting the breakdown point is a high probability in a market that is changing the trend, if at least on a mid-term basis (2-4 months).
With the indexes now in an established correction downward, most trading should be done on the short side but picking the correct entry points into a trade is important, especially now when quite a bit of downward movement has already occurred. Expecting a rally toward the end of the week means that the mentions to be given next week are likely to have better entry points, more attractive risk/reward ratios, and increased probability numbers. Nonetheless, there are 3 mentions this week with 2 of them being sales and 1 being a purchase.
One of the sell mentions is unlikely to be filled until the end of the week but the desired entry point is clearly defined at this time so the mention is given just in case the stock gets to that level by Friday. The other sell mention is in a stock that is not all that sensitive to the indexes but does find itself at a desired entry point at this time.
The last mention is a purchase of a stock that is not likely to be affected much by the drop in the indexes and finds itself at a very attractive chart entry point at this time.
SALES
ORCL Friday Closing Price - 32.33
ORCL made a new 10-year weekly closing high at 35.96 the first week of May but has now given a failure to follow through signal not only closing below the 10-year high at 34.56, made in Jan01, but also below the most recent high prior to the last rally at 34.18. The stock had been on a major run since August of last year from a low of 21.66 but ran out of gas, much like the NASDAQ did, when no resistance was found up above. Failure-to-follow-through signals are often the best indicators of a temporary change of trend.
ORCL, much like the indexes and many other stocks, had a reversal week with higher highs and a close below the previous week's low in which the previous high at 36.50 was tested successfully while giving a small sell signal as well as breaking below the 20-week MA convincingly. Further downside over the next 4-8 weeks is now expected to be seen.
On a weekly closing basis, resistance is decent at 33.68, minor at 34.02 and 35.19 and strong at 35.96. On a daily closing basis, resistance is minor to decent at 33.68 and decent at 34.22. Above that level, there is minor resistance at 34.50, decent resistance at 35.73, and strong resistance at 36.37. On a weekly closing basis, support is decent at 30.76 and then nothing until minor support is found at 27.49. Below that, there is minor to decent support at 25.95. On a daily closing basis, support is minor between 31.67 and 32.00 and decent at 30.20. Below that level, there is very minor support at 28.63 and then minor to decent at 27.05.
ORCL broke below the 20-week MA and is expected to drop down to the 50-week MA, currently at 29.50. In addition to the MA line, the most recent important intra-week low seen Mar14th was at 29.62, giving that level a tag of "highly likely to be seen". Nonetheless, the stock had set up an important top 1-year ago at 26.61, which is also where the 100week MA is currently at, and if the indexes are in the seasonal correction that could take the DOW down to the 11500 level, the stock should also break the weekly close support at 30.20 (29.62 intra-week) and head down to the 100-week MA currently at 26.50. Certainly the failure to follow through signal will project the stock dropping to that level if for no other reason than such a signal usually ends up with a strong move in the opposite direction.
ORCL spent 5 weeks between late January and mid February trading up to but not above 33.71 (33.68 on a weekly closing basis). That level should not be broken at this time if the signals given this past week are correct and confirmed. Giving that level added resistance strength is the 20-week MA, which is currently at 33.45, as well as the 100-day MA, which is currently at 33.20. In addition, the high seen this past week was at 34.30, which is also where the 20-day MA is located, making 33.71 to 34.30 a strong resistance level.
It is likely ORCL will be moving down at the beginning of the week, as is expected to be seen in the indexes as well, with the stock likely to get down near the $30 level. Nonetheless, as mentioned above in the index evaluations, a bounce should be seen toward the end of the week in which the breakdown points will be retested (20-week and 100-day MA's). Such a rally up to that level should be sold.
Sales of ORCL between 33.18 and 33.43 and using a stop loss at 34.40 and having an objective of 26.61, will offer a 5-1 risk/reward ratio.
My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the highest).
CZZ Friday closing price - 12.15
CZZ is a Brazilian company that produces and sells sugar and ethanol products. The stock has been traded since Aug07when it was first released as an IPO at $11 a share. Since that time the stock has traded as high as 16.19 and as low as 2.03. The high at 16.19 was made in Mar08, likely with the help of the index rally, and just 5 months ago in January of this year that high was tested successfully with a rally up to 14.74. Since then the stock has been in a short-term downtrend that is likely to continue if the indexes head lower.
CZZ, being a foreign company, has not been affected strongly with the recent index drop but finds itself close to a strong resistance area as well as downtrend line, making the trade attractive from a risk/reward ratio point of view. In addition, the short-term trend has been down and there doesn't seem to be any compelling reasons for the trend to break at this time.
On a weekly closing basis, resistance is minor at 12.45, decent between 13.16 and 13.24, decent again between 13.68 and 13.90, decent to strong at 14.35 and major at 15.00. On a daily closing basis, resistance is minor at 12.27 and minor to decent at 12.45. Above that level, decent resistance is found at 13.35 and 14.07 and strong resistance is found at 14.57. On a weekly closing basis, support is minor to decent at 10.98 and decent at 10.03. On a daily closing basis, support is decent at 11.65, minor at 11.31, and decent at 10.83. Below that level, there is no support until the 10.10 level is reached.
CZZ is not a large range trading stock but does show decent volume and a very well defined chart. In addition, the stock has been on a downtrend that now shows 4 successful retests of the highs, all lower than the previous ones, suggesting that the trend will continue. With the all the world's markets in a seasonal correction phase, there is no reason to believe that the stock will buck the trend.
CZZ did break below the 50-week MA, currently at 12.20, the first week of May and on Friday the stock closed back at the line in what could end up being a successful retest of the break if the stock closes in the red next Friday. The 20-week MA is currently at 12.50 and the 110-day MA is at 12.60, as well as a daily and weekly close of some importance at 12.45, giving that entire area the look of resistance that will be tough to break. With the stock having closed on Friday at 12.15, selling the stock right around here offers a very low risk/factor and a good probability rating.
The objective to the downside in CZZ has to be the $10 level which is not only an area of previous support of some consequence but also a psychological magnet of importance. Drops down to the $10 level should be seen if the stock is not able to get above the resistance levels mentioned above.
Sales of CZZ between Friday's closing price of 12.15 and up to 12.32 and using a stop loss at 12.69 and having a 10.03 objective offers a risk/reward ratio of 4-1.
My rating on the trade is a 3.25 (on a scale of 1-5 with 5 being the highest).
PURCHASES
STP Friday closing price - 7.62
STP is a solar company that has been depressed in price because of the lack of support for solar power over the past year or so. Nonetheless, the recent problems seen in Japan with the Nuclear power plant explosion has once again turned attention to alternative power sources and has brought new interest into this depressed sector. In addition, this past week the U.S. Energy Department announced new funding for solar companies which had not been available before these problems occurred.
STP saw a high in price in Jan08 at 54.65 and a low in price in Mar09 at 5.09 and for the past 2 years the stock has traded mostly sideways with a 21.38 high at a 7.05 low seen in November of last year. The stock has been deteriorating in price since February when the stock got up to a high of 10.83 but did find some support 7 trading days ago when the stock got down 7.28 and bounced up to 8.50 in just a few days, likely because of the renewed interest in alternative power sources, as well as from the fact the 7.05 low seen in November was tested successfully. The stock is now back down near the recent lows in what could be the second successful retest of the 7.05 low seen last year.
On a weekly closing basis, resistance is minor at 8.03, minor to decent between 8.94 and 8.97, and decent at 9.42. Above that level, support is decent at 10.71 and decent to strong at 11.37. On a daily closing basis, support is decent at 8.12, minor to decent at 8.64, and decent again between 9.50 and 9.64. Above that level, support is decent at 10.14, minor to decent at 10.84 and strong at 11.37. On a weekly closing basis, support is decent at 7.32 and strong at 5.34. On a daily closing basis, support is decent at 7.41 and strong at 7.14.
STP was strongly affected, as other solar companies were, with the #1 company in the industry (FSLR) dropping strongly in price. Nonetheless, the problems with First Solar had more to do with internal strife with the officers of the company than with problems in the industry. FSLR is now nearing a strong chart support level in the low $100's and should not have much farther to fall. In addition, FSLR did get a good piece of news this past week when Germany announced plans to begin to phase out Nuclear power plants. FSLR is the #1 provider of Solar Energy in Germany. As such, with the industry problems seemingly taking a slight turn for the better, and the stock near a strong 3-year support, purchases of the stock now have a slightly higher probability rating and when added to the very attractive risk/reward ratio, it makes the trade a must-do.
If in fact STP is to hold the 3-year lows in price, rallies up to the 50-week, 50-day, 100-day, and 200-day MA's, all between 8.70 and 9.00 should be seen as a bare minimum move up. The 200-day MA, currently at 8.70, has been a major pivot point for the stock since February 14th and could once again be a pivot point for the near future. If the stock can get above the 200-day MA, the $10 area will become a strong magnet as there isn't a lot of important resistance above $9.00.
To the downside, the whole key is the 7.05 low seen on November 30th, as well as the recent low at 7.28 seen May 25th. If those 2 levels hold, especially if the most recent level holds, there will be 2 successful retests of the low and the technical traders will jump aboard the bull side. With the depressed state of the industry it is not likely the stock will be affected much by a drop in the indexes. In fact, with the worries about Nuclear Power throughout the world, a new thrust back in to alternative energy sources could be seen, in spite of any downside in the general market.
Purchases of STP between 7.45 and 7.66 and using a stop loss at 6.95 and having an objective of 10.44, will offer a 4-1 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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| Monthly & Yearly Portfolio Results
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Closed Trades, Open Positions and Stop Loss Changes
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Status of account for 2007: Profit of $9,758 per 100 shares after losses and commissions were subtracted. Status of account for 2011, as of 3/1 Loss of $8570 using 100 shares per mention (after commissions & losses) Closed out profitable trades for May per 100 shares per mention (after commission)
AMZN (short) $97 AMZN (short) $23 Closed positions with increase in equity above last months close.
ABB (long) $132 Total Profit for May, per 100 shares and after commissions $302 Closed out losing trades for May per 100 shares of each mention (including commission)
AMZN (long) $9
AXP (short) $68 AMZN (short) $47 DCTH (long) $28 AMZN (short) $78 ACOR (short) $561 HANS (short) $77 AMZN (short) $202 HAL (short) $61 Closed positions with decrease in equity below last months close.
SVNT (long) $798 Total Loss for May, per 100 shares, including commissions $2337 Open positions in profit per 100 shares per mention as of 5/31
JPM (short) $250 UTX (short) $769 VZ (short) $26 AMZN (short) $248 Open positions with increase in equity above last months close.
ELON (long) $20 Total $1389 Open positions in loss per 100 shares per mention as of 5/31
TRLG (short) $57
HAL (short) $8 Open positions with decrease in equity below last months close.
STP (long) $170 Total $337 Status of trades for month of May per 100 shares on each mention after losses and commission subtractions.
Loss of $983
Status of account/portfolio for 2011, as of 5/31Loss of $9553 using 100 shares traded per mention.
DCTH made a new 15-month intra-week and weekly cloisng low this past week suggesting that further downside will be seen. The bulls will need to generate a rally and higher close next Friday above 5.68, by at least 10 points, in order to prevent confirmation of the breakdown. A close above 5.68, on a daily closing basis, will help but the Friday close is needed to change the mood. Nonetheless, the break does look somewhat dire as the bears were successful in closing the stock not only below previous support levels of consequence but also below the previous high weekly closes (between 5.58 and 5.81) from 5 years ago when the stock was nowhere as far ahead fundamentally as it is now. Bear signals to be sure. Should follow through to the downside be seen this coming week, drops down to the psychological support at $5 couild happen. Nonetheless, the reality is that the next actual support level is not until the 4.60 area is reached. In addition, adding to the chart woes of the bulls, the stock had a classic reversal week having gone above last week's high and closing below last week's low, and on the lows of the week, suggesting that further downside will be seen this coming week. A close above 6.09 is needed to give a signal that the bottom has been found and that further upside will be seen. Probabilities favor a drop down to $5 this coming week.
FCEL got a piece of good news this week with announcement of the biggest sale of a power plant in their history. The stock gapped up on the announcement and broke through several resistance levels of consequence but was unable to get above the strong resistance between 1.97 and 2.03 having reached 1.97 and backing off. A small buy signal on the weekly chart was given but not confirmed when the stock failed to close above the 20-week MA, currently at 1.77 (closed at 1.75). Nonetheless, on the daily chart the stock seems to be building a bullish flag formation with the flagpole being the rally from 1.35 to 1.97 and the flag being the action of the past 3 days between 1.92 and 1.73. A break above 1.97 would give an objective of 2.35. Support on a daily closing basis is found at Friday's close of 1.75. Stronger support is found at 1.62. In order to maintain the flag formation a green close on Monday needs to be seen. If the stock falters this week, in conjunction with the indexes, intra-day drops down to 1.55 could be seen. Nonetheless, the gap down at 1.46 should not be closed if the breakout was for real. ELON generated another red close on Friday but the stock was able to stay above the previous week's low. In addition, the stock rallied off of Friday's lows to close right on the 100-day MA and maintain the failure to follow through signal to the downside that the stock had generated at the beginning of the week. The stock was able to rally on Friday from its lows even though the indexes closed near the lows, suggesting the stock may not react negatively if the indexes head lower this coming week. The stock did go up to the resistance at 9.70 and failed to break it, leaving the immediate future of the stock in question. A daily close above 9.56 by at least 10 points would be considered a positive. A break below the 9.03 level would likely push the stock down to its strong support at 8.80. Neither the bulls nor the bears have an edge at this time. JPM generated yet another red weekly close and in the process closed below the 50 and 100 day MA's, both currently at 41.75. Nonetheless, the break of the line was only by a few points and not convincingly, leaving the door open for a rally next week and a successful retest of the line. On a negative note, the stock broke below the 200-day MA, currently at 42.30 and confirmed the break with 2 subsequent red closes in a row below the line. On a daily closing basis, some minor support is found around Friday's close, between 41.50 and 41.64. Nonetheless, the support is from previous highs and therefore can only be considered as minor support. Previous daily low close support is not found until the 39.32 area is reached. Strong support is found down just above $35. Monday's close is likely to be somewhat pivotal for the week as a red close below 41.50 by at least 10 points would suggest the $40 level will be reached during the week. A green close on Monday, by at least 10 points, would suggest the most recent daily closing high at 43.24 would be visited. The 20-day MA is currently at that level as well, making that a resistance level of some importance. Probability favors the downside as this stock is index sensitive as well as on a clear short-term downtrend. UTX gavel a small sell signal on the weekly closing chart closing below a previous weekly low close at 83.45. In addition, the stock also closed below the 20-week MA, currently at 84.40 making the sell signal even more indicative. Like the DOW the stock had a negative classic reversal week in which the high at 90.67 was tested successful with a rally up to 87.79 and a close below the previous week's low, suggesting further downside will be seen this coming week. Minor intra-week support is found at 81.19. Stronger support is found at 77.05 which is only slightly below the 50-day MA, which is currently at 77.60. The stock did close the gap down at 82.47 while also breaking below the 100-day MA, currently at 84.15. Like its parent index, probabilities favor a drop at the beginning of the week, likely down to 81.19 and then a rally back up to test the 100-day MA at 84.15. Ultimately, though, drops down to the $77 are likely to be seen over the next few weeks. VZ broke convincingly below the 20-week and 100-day MA's, both currently at 36.60. The stock closed on its lows and further downside is expected to be seen this coming week with either 34.35 or 33.36 as the objective. A second sell signal was given this week on the weekly closing chart when the stock closed below a previous low weekly close of some consequence at 35.84. The main downside objective is 33.36 but the stock may take a teeter-totter approach to get there, likely taking as much as 3-6 weeks to accomplish its goal. There is decent support down at 35.38 and decent resistance now at 36.70. Possibilities are high that the stock will trade within that trading range for the next 4-8 weeks, as it did between Jan25th and Mar11th, before getting down to 33.60. As such, it makes sense to take profits near 35.40 and resell the stock up around 36.60. This is not a volatile or big range stock, as such reaching its downside objective will take patience. Nonetheless, the probabilities are high that the stock will ultimately get down to 33.36. HAL generated another green weekly close but was unable to close above the 34-month high weekly close at 50.45 (51.45 on an intra-week basis). The stock did not react to the weakness in the indexes and therefore the probabilities of the stock heading higher, up to the all-time high at 55.38 have increased. The stock needs to close in the red next Friday, but on a daily closing basis if the stock can close below 49.03 by at least 10 points one day this week, the recent upside momentum will subside, increasing the probabilities of the stock generating a red close next Friday. Stops should be in place at 51.55. Nonetheless, if the indexes head lower on Monday and the stock is staying around the $50 demilitarized zone (49.70-50.30), it might be wise to scratch the trade and look to use the money elsewhere. AMZN had a very negative week generating a failure to follow through signal on the weekly closing chart when it closed below the previous all-time high seen in February at 189.25. In addition, the stock closed on Friday below the 50-day MA, currently at 189.70. If the stock follows through with another red close on Monday, drops down to the 100-day MA, currently at 183.00, are likely to be seen. On a positive note, though, the stock did not close below the 20-week MA, currently at 183.25, leaving the door open for a reversal to be seen by next Friday. Probabilities favor further downside at the beginning of the week, down to the $183 level, followed by a rally toward the end of the week with the bulls trying to negate the failure to follow through signal by closing above 189.25 next Friday. Just like the indexes, the stock did have a classic reversal week in which the all-time high at 206.39 was tested successfully with the rally this week to 198.44. Ultimately, if the indexes are in the expected seasonal correction, drops down to the 50-week MA, currently at 164.65 should be seen. There is also previous intra-week support at that level. This is a very tradable stock worthy of trading in an out at support/resistance levels. The 191.60 level will now be considered decent resistance. Probabilities favor the stock heading lower at the beginning of the week, with 183.25 as the objective and generating a rally at the end of the week with 191.60 as the objective. TRLG, like the indexes and many other stocks, generated a classic negative reversal with higher highs than last week and a close below last week's low. Probabilities favor the stock dropping down to the 100-day MA, currently at 24.60, which is also where the 20-week MA is currently located. Resistance is now decent at the 50-day MA, currently at 26.90 as well as some minor previous intra-week high at 27.42. Strong resistance on the daily chart will now be found 28.90, but the possibilities of getting up to that level are not good (probably 30-70). If the stock manages to get below the 100-day MA, currently at 23.35, the 25.02 level will become decent resistance. Probabilities favor a 27.42 to 24.50 trading range this week with a Friday close at 26.70. STP once again generated a new 6-month weekly closing low on Friday, closing below the most recent weekly low close at 7.70. Nonetheless, the stock still closed above the 25-month weekly closing low at 7.32. The stock was also able to stay above the most recent daily close at 7.41 and any green close at this time, prior to closing below 7.41 would give a successful retest of the support and bring in new buying. Any daily close 8.12 would now be a buy signal. The stock did close on the lows of the day and further downside is likely to be seen on Monday. Nonetheless, there are reasons to believe the stock is about ready to turn to the upside and purchase at these levels does offer a very good risk/reward ratio with a decent probability number. Stops should be in place at 6.95.
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1) ELON - Averaged long at 9.19 (4 mentions). No stop loss at present. Stock closed on Friday at 9.29.
2) DCTH - Purchased at 5.73. Averaged long at 5.70 (2 mentions). No stop loss at present. Stock closed on Friday at 5.38.
3) FCEL - Averaged long at 1.7625 (4 mentions). No stop loss at present. Stock closed on Friday at 1.75.
4) STP - Averaged long at 9.345 (2 mentions). No stop loss at present. Stock closed on Friday at 7.62.
5) ABB - Liquidated at 26.31. Purchased at 25.31. Profit on the trade of $100 per 100 shares minus commissions.
6) UTX - Shorted at 90.46. Stop loss lowered to 87.89. Stock closed on Friday at 83.24.
7) VZ - Averaged short at 37.06 (2 mentions) Stop loss lowered to 37.09. Stock closed on Friday at 35.63.
8) HAL - Shorted at 51.09. Averaged short at 55.58 (2 mentions). Stop loss at 51.55. Stock closed on Friday at 50.28.
9) AMZN - Shorted at 199.17. Stop loss at 198.54. Stock closed on Friday at 188.32.
10) JPM - Averaged short at 44.49 (2 mentions). Stop loss now at 43.48. Stock closed on Friday at 41.59.
11) TRLG - Shorted at 28.82. Stop loss at 29.80. Stock closed on Friday and 26.65.
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The opinions and commentaries by Mr. De Vito are not a recommendation to buy or sell, but rather
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