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Issue #224 
May 1, 2011 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Indexes Extend Rally! "Sell in May and Go Away" Period Ahead.
DOW Friday closing price - 12810
The bulls continued to get the positive earnings reports they have been banking on to extend the bull trend and the DOW made another new 34-month intra-week and weekly closing high this past week. In the process the index broke above some decent resistance levels from Feb07 and Feb08 at the 12743/12767 area, based on a weekly close. The index ended up closing near the highs of the week and follow through to the upside is expected to be seen this coming week, especially since there is no resistance whatsoever until the demilitarized zone at the 13000 level is reached (12970 and 13030).
The bulls have been able to establish that a bull trend is in place and that an attempt at the all-time highs of 14198 is likely to be seen sometime in the 9-12 months. By the same token the DOW finds itself highly overbought, reaching a decent to strong resistance level, and in a seasonal period where the indexes usually have a strong correction. As such, it is likely that sometime in the next week or two that a temporary top will be found and a correction of anywhere from 10-15% will occur going into the summer months.
On a weekly closing basis, resistance is minor to decent at 12986 and decent to strong at 13058. Above that level there is no resistance until 13625. On a daily closing basis, no recent resistance levels have been established. On a weekly closing basis, support is minor at 12341 and decent at 11858/11893. On a daily closing basis, support is minor between 12450 and 12479. Below that level there is minor support at 12263 and again at 12197. Minor support is found at 12058 and strong support at 11613.
The DOW was once again able to generate the April rally factor having moved 439 points above the March highs. This fits in well with the last 4 years when the index rallied between 306 to 660 points during the same period of time. By the same token, 8 out of the last 10 years the index has seen moves down starting either in May or June that varied from a low of 800 to as much as 3500 points downward. The only 2 years the index showed a rally during the May/July period was when the index was first coming out of a recession back in 2003 (saw a low of 7416 in March) and 2009 (saw a low of 6470 in March), as such, the probabilities of the index having some correction over the next 2-4 months is high.
The DOW is strongly overbought and one very important factor is that the volume during the last 5 months has been very low, in fact in 3 of the last 5 months the monthly volume has been the lowest seen since 1999. Low volume in a bull trend is a bearish indicator, suggesting that fewer buyers are getting involved.
Nonetheless, the DOW did close on the highs of the week and with no resistance or negative catalyst being seen, momentum should carry the index higher this coming week. Resistance, though, is decent at the 13000 level from some important "lows" seen at that price "before and after" the index got up to the all-time high at 14198 in 2007, as well as important highs seen in April 2008 "after" the index dropped to 11634 in February of that year. With all the reasons mentioned up above, the probabilities of the index starting a strong correction after reaching the 13000 level are high.
To find important support as well as to get a good picture of what is likely to happen over the next couple of months, the period between January 2008 and May of 2008 should be studied. The DOW first broke convincingly below 13000 in Jan07 dropping down to 11634 and then rallying back up to 13193 in May of that year. The 1559 point move from the lows to the highs would be commensurate with a 12% correction downward occurring in the index this summer, fitting in well with the expected 10-15% correction that is likely to be seen. Certainly the major low at 11634 has to be now considered a strong support especially since the index just 6 weeks ago dropped down to 11555 and then generated a strong rally. A drop back down to that level would be considered a major retest of the support level and after which an attempt to reach the all-time high at 14198 could be attempted.
On a shorter term basis, though, there is no support whatsoever until the previous high, as well as the 20-day MA, are reached at 12450. As such, after the DOW begins to correct, the first drop should be almost straight down to that level. By the same token, that correction is not likely to start this week as further upside is expected to be seen, unless the economic reports are negative.
The DOW is now showing higher lows and higher highs the past 4 trading days and 7 out of the last 8. If that trend continues on Monday (likely), Friday's low at 12751 is not likely to be broken. In addition, there is support there on the 60-minute chart as that is where the 20 60-minute MA is currently located. The probabilities favor higher highs than Friday on Monday and a rally up into the 12900 level. Possible trading range for the week could be something like 12800 to 13000, all of this based on the economic reports coming out as expected.
NASDAQ Friday closing price - 2873
The NASDAQ made a new 10-year intra-week and weekly closing high this past week, surging and closing above the previous 2007 intra-week high at 2861. The index now has no resistance of consequence on the monthly chart until minor resistance at the 3000 level is reached. The index is likely to once again take the leadership in the index race as the other indexes do show resistance of consequence above, whereas the NASDAQ does not.
The NASDAQ is the home to some of the more popular stocks, such as AAPL, NFLX, and AMZN, and with those stocks continuing to surge forward with earnings and fundamentals pluses, further upside is likely to be seen for the next week or two, or until the psychological as well as major previous low resistance is reached at the 3000 level.
On a weekly closing basis, resistance is very minor at 2887 and at 2917. Above that level, minor resistance is found at 3205. On a daily closing basis, no recent resistance is found. 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 at 2764, and minor to decent between 2722 and 2745.
The NASDAQ has no resistance above unless one goes back 10-12 years to 1999 and 2001. Even then, the resistance found on a weekly closing basis at 2888 and at 2917 has to be considered very minor as even then those resistances were not of high consequence then. The 3000 level has to be considered decent psychological resistance, especially when in the year 2000, after the index had gone up to the all-time high at 5132, it dropped down to 3042, as such, the index is likely to have some problems getting above that level anytime in the near future.
By the same token, the probabilities of the NASDAQ getting up to 3000 sometime in the next 2 weeks have now increased, especially since 2 of the most popular stocks in the index and in the market (AAPL and AMZN) seem to be heading higher at this time, perhaps indicatively so.
As far as support is concerned, the NASDAQ should show some support at the previous weekly closing high from 2007 at 2833. In addition, the 2800 level does show quite a few recent daily highs and lows of consequence, giving that area decent support strength. The index has now confirmed that the breakaway/runaway gap formation is valid, having confirmed it with 4 days in a row of higher daily closes. The runaway gap is down at 2829 and though it might be tested at some point this coming week, it is not likely to get broken as it will act as a decent support level.
With no recent resistance above it is expected the NASDAQ will move higher in a fast manner, as such, it is more important to watch what the index "fails" to do than what it does. Reaching the 3000 level would be of great consequence, not having accomplished that since the year 2001. By the same token, the bears will do everything in their power to prevent that milestone from occurring. Based on the 63 point trading range seen last week, possible trading range for this coming week is 2861 to 2923.
SPX Friday closing price - 1363
The SPX was also able to make a new 34-month intra-week and weekly closing high when it got up to 1364 on Friday. The index, much like the DOW, shows no resistance whatsoever until 1396 is reached, as such further upside is likely to be seen, especially since the index closed on the highs of the week.
The SPX is laboring more than the other indexes, inasmuch as financial stocks continue to languish. As such, the other indexes seem to be much better indicators of what the market will do than the SPX.
On a weekly closing basis, resistance is decent to strong at 1395 and strong at 1425. On a daily closing basis, no recent resistance levels can be found. On a weekly closing basis, support is minor at 1328, decent between 1276 and 1279, minor at 1236 and decent at the 200-week MA, currently at 1190. On a daily closing basis, support is very minor at 1335, minor at 1314, decent at 1305/1306, and decent at 1298/1300. Below that level, minor to decent support is found at 1276, and decent to strong at 1256.
Having negated the 75% Fibonacci retracement level, the SPX is now free to rally up to the area that was strong resistance back in May 2008 at 1396 to 1425. Nonetheless, it should be mentioned that the DOW outpaced (rallied more percentage-wise) the SPX every day this past week and if that continues it is possible the index will not reach the resistance levels at 1396 and 1425, if the DOW gets up to its commensurate level at 13000.
On the other side of the coin, there is no resistance whatsoever until the SPX reaches 1396, as such the possibility of the index running up an additional 2% in value over the next week or two is high.
Support will now be strong down at the 1296 to 1300 area and some support should also be expected at the February highs at 1344. Nonetheless, in looking at the possibility of a 10-15% correction over the next 4 months, it is possible the SPX will drop all the way down to the 1256 level, which would in turn be a 12% correction from a 1396 high.
The bulls continue on a roll breaking down resistance levels without much problem. Nonetheless, the overbought indicators are at the top of the chart and the market is now getting into a seasonal period where a correction of consequence is likely to be seen. In addition, the indexes, at least the DOW and the SPX, are getting near levels of great importance from May 2008 that are likely to hold up at this time. The earnings help received over the past couple of weeks is now likely to start fading as next quarter earnings, which normally are the lowest of the year, will start being factored into the market, making the next 3 months difficult to generate further upside, especially with the "extraordinarily" low volume being seen this year (lowest in 10 years).
Nonetheless, the momentum upward continued last week and the bulls are likely to push the indexes up at least one more week, hoping to reach psychological levels that are highly positive, in some cases milestones (13000 in the DOW, 3000 in the NAZ, 1400 in the SPX). Reaching those milestone objectives, though, should bring in selling of consequence as the "sell in May and go away" adage is likely to be in effect this year, especially due to the high prices in all indexes.
This week, though, economic reports will once again take center stage with the ISM Index on Monday and the Jobs report on Friday. These are all "A" reports and likely to impact the market to some degree, likely more to the downside if negative than to the upside if positive. The first report, the ISM Index, comes out at 10:00am on Monday and could set the stage for what the indexes will do the rest of the week. Nonetheless, if the report comes out "as expected" the upside momentum will likely continue taking the indexes to their milestone objectives.
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Stock Analysis/Evaluation
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CHART Outlooks
Though stocks and indexes should head higher this coming week, profits on long positions will likely be somewhat minimal and risk factors on them high.
It is likely that individual stocks will start moving this week on their own chart formation. Simply stated, stocks in general will not likely move with the indexes as they now have their own established support and resistance levels.
The mentions this week will be mostly short positions in stocks that already show strong and likely not breakable resistance levels above. In addition, at the end of the section below, you will find additional stocks that can be considered for shorting, but would have to move up a decent amount this week before reaching their desired points to short. They will simply be talked about, but no official mentions will be made. If these stocks do reach their desired objectives, I will put the mention on the message board.
There is "one" buy mention this week in a stock that is actually an "add to" mention on a held stock. This stock is not sensitive to the indexes and will not likely be affected negatively if they start heading lower.
SALES
VZ Friday Closing Price - 37.78
VZ broke out of a $26 to $33 trading range back in December after having trading in that range for 27 months. The stock then proceeded to rally up to the $39-$40 area (got up to 38.95) where decent resistance was found. Selling came in and the stock dropped back to test the $33 level from which the stock had broken out of, with a drop down to 33.36.
VZ got a good piece of news on March 21st in the form of a purchase by AT&T of T-Mobile, which is supposed to help VZ compete in its race with AT&T. Nonetheless, even with that good piece of news, the stock has been unable to get above the 38.95 level seen on March 30th and with the indexes likely to start correcting down sometime in the next week or two, the probabilities seem to favor VZ going back down to the $33 level and getting into a $33-$40 trading range for the next few months or longer.
On a weekly closing basis, resistance is decent between 38.47 and 38.84 and decent again at 39.94. On a daily closing basis, resistance is decent between 38.47 and 38.96 and very strong at 39.32. On a weekly closing basis, support is minor at 36.91, at 35.85, and at 34.95. Decent support is found at 33.82. On a daily closing basis, support is very minor at 37.64 and at 37.24 and decent at 36.91. Below that there is minor support at 35.58 and decent to strong support between 34.30 and 34.36.
VZ has mostly been a range bound stock over the years where it gets into a trading range and seems to stay in that range for many months if not a couple of years. The resistance seen around the $40 level goes all the way back to Mch04 as the stock has topped out of rallies a total of 4 previous times between 38.84 and 39.59, not including the recent one at 38.47. With the indexes likely reaching a temporary top, it seems highly unlikely the stock will be successful in breaking above such an established resistance level. It should be mentioned, though, that there is even a stronger long-term resistance level up at $42 that even if the stock is able to get above $40, it would likely encounter enough selling at $42 to cause the stock to fall back down to the $33 to $34 level.
Support in VZ is clearly established between $33 and $34 dollars from a total of 7 previous weekly low closes between 33.63 and 34.66 over the past 8 years, as well as 4 previous high weekly closes in that range during the same period of time.
On a short-term basis, VZ shows a gap between 35.84 and 36.37 that was made on the day the AT&T/T-Mobile merger was announced. The gap was successfully tested a week ago Friday with a drop down to 36.50, from which the bulls rallied the stock to close another gap to the downside the stock left open on 4/6 between 38.27 and 37.95. That gap was closed last week.
With the indexes likely to rally a bit further to the upside this coming week, VZ is likely to at least test the recent high at 38.95 and perhaps intra-week go up into the 39's, though the possibilities of that happening are no better than 50-50%. Either way, the stock is a likely good short using the Apr08 high at 39.94 as a stop loss point, and having an objective of a drop back down to 33.86.
Sales of VZ between 38.70 and 38.95 and using a stop loss at 40.04 and having a 33.84 objective, offers a 4-1 risk./reward ratio.
My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the highest).
JPM Friday closing price - 45.60
JPM, since Oct07, has traded between $35 and $48 for 75% of the time and the other 25% of the time, the stock traded lower. With the indexes likely beginning to head lower sometime in the next couple of week, the probabilities of the stock heading back down toward the $35 level are high, especially since the stock sold off recently "after" a positive earnings report.
JPM did make a 32-month high 6 weeks ago, breaking above the previous high at 48.20 and rallying up to 48.36. Nonetheless, the breakout did not generate any follow through and the following week the stock gave a failure to follow through signal. The 48.36 high was tested successful with a rally up 47.80 4 weeks ago, and now the probabilities have begun to shift back down to the downside.
On a weekly closing basis, resistance is minor to decent between 46.84 and 47.58 and decent to strong between 48.00 and 48.66. Above that level there is major resistance at 52.63. On a daily closing basis, resistance is minor at 45.55, minor again between 46.56 and 46.62, decent to strong at 47.64 and strong at 48.00. On a weekly closing basis, support is minor to decent at 44.68, minor to decent again between 43.52 and 43.65, and then decent at 40.94. Below that level, resistance is decent to strong between 35.83 and 36.64. On a daily closing basis, support is decent at 44.59 and strong between 43.43.96 and 43.81. Below that, there is no support until the 41.54.41.66 level is reached.
JPM has been trading between 43.40 and 48.36 for the last 12 weeks without being able to get out of that trading range in spite of the strong rally in the indexes and more importantly in the SPX. It was even more indicative of the bull's lack of power when the stock reported better than expected earnings a week ago and the stock sold off on the news.
JPM did drop down to 43.53 2 weeks ago and tested the 43.40 support successfully, which in turn caused the stock to rally to Friday's high at 46.02. There is a decent possibility that if the indexes rally this coming week that the stock will be "dragged" up to the $47 level one more time. Nonetheless, the stock has been giving countless of indications that the bulls have no ability to take the stock higher, and if the expected 10-15% correction begins in the indexes over the next 2 weeks, the probabilities favor the stock breaking down.
JPM has been toying with the 100-day MA, currently at 44.75, for the last week and if that line breaks, the 200-day MA, currently at 41.80, would be the next objective, especially since the stock shows an open gap between 42.45 and 42.65 from January 3rd that will become a magnet should the stock break below 43.40. In addition, the 200-week MA is currently at $40 and that is the overall objective of this trade.
Sales of JPM between 46.90 and 47.10 and using a stop loss at 48.46 and having an objective of 40.00, 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). The rating would be a 4.5 if the stop loss would be placed at 23.85.
PDCO Friday closing price - 34.71
Since Jul03 (8 years) PDCO has traded 75% of the time between $25 to $40 and only broke out of that trading range twice, with a rally up to $54 in 2007 and a drop down to $16 in 2009. During that 75% of the time, the stock traded between $28 and $38 30% of the time. In looking at the chart, it seems likely that the stock is presently in the latter trading range.
PDCO is presently on a strong rally upward that has no resistance above until 36.97 is reached, as such, with the help of the indexes, it is likely the stock will run up another $2 over the next week or two, and get into an area of resistance where a short position is attractive.
On a weekly closing basis, resistance is minor to decent between 35.64 and 36.36 and decent at 37.18. Above that level, strong resistance is found 40.04. On a daily closing basis, there is no recent (1-year) resistance above. On a weekly closing basis, support is minor between 33.00 and 33.44, decent at 31.50 and strong at 29.02. On a daily closing basis, support is minor at 33.74, decent at 32.90, and decent to strong at 32.18. Below that level, there is minor to decent support at 31.28 and decent support at 29.60.
PDCO has been rushing to get back up to the top of the trading range that it has experienced for so many years. The stock had a $1.70 trading range last week and probably will see the same this coming week. Nonetheless, the $37 area has shown itself to be a decent resistance level for the last 6 years even though from Dec06 to Nov07 the stock was able to get up to $40. With the stock trading at $35 and the indexes likely to be reaching a top in the next week or two, it is unlikely the stock will get above the $37 level at this time, though in the future (likely after October) the stock will likely go up to $40.
The most recent low of consequence in PDCO was 30.42, seen in February of this year. Drops down to that level, and even perhaps down to the 100 and 200 week MA's, currently both around 28.50 to 29.00, could be seen if the indexes correct the expected 10-15% over the summer months.
Sales of PDCO between 36.96 and 37.10 and using a stop loss at 37.88 and having an objective of 28.50 will offer a 9-1 risk/reward ratio.
My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the highest).
PURCHASES
SVNT Friday closing price - 11.62
SVNT is a small cap biotech trading 50% below the 52 week high with an approved FDA drug with blockbuster potential. The approved drug also has orphan status, giving it a 7 year marketing exclusivity. Management was changed in January, giving some cause for concern at the time. Nonetheless, the new CEO has proven himself to be an astute executive and the price of the company has been moving higher since the beginning of March. Having an FDA approved drug that is the "only" successful drug for gout, opens the door for big pharma to come in and buy the company out. The company is presently undervalued, based on analysis of the income potential for the drug, and with many of the concerns voiced over the past 4 months now answered successfully the stock has begun to more upward.
SVNT broke above an important resistance level 5 weeks ago at 10.46, giving a buy signal in the process, and is now on its way upward trying to reach a previous high resistance at 12.97 as well as an area where many previous lows of consequence are found. With a short-term trend now established, adding positions can be considered.
On a weekly closing basis, resistance is minor at 12.03 and decent between 12.44 and 12.57. Above that level, resistance is very minor until decent resistance is found at 15.30. On a daily closing basis, resistance is minor at 12.13 and minor to decent at 12.57. Above that level there is minor to decent resistance at 13.15 from the 200-day MA, and up to 13.61 from a previous high daily close. On a weekly closing basis, support is minor at 10.42 and strong between 9.27 and 9.38. On a daily closing basis, support is minor at 11.40 and minor to decent at 10.79. Below that level, support is decent at 10.17.
SVNT was trading at $15 prior to the FDA approval and after the approval rose up to the $23 level. Nonetheless, mistakes by the prior management in trying to sell the company without any established sales caused the stock to fall when the merger fell through. The new CEO has an established positive reputation as he has been successful in the past in selling a small pharma company to big pharma, and he has already set in place a sales force to sell the product to interested users. Rallies back up to the $13 level are highly likely now, but in reality the stock should move up to the $15 where a price had been established as fair, "prior" to FDA approval.
Though the stock does not show any strong support until the 10.20 to 10.40 level is reached, the stock did break above a minor resistance at 11.60 this past week and was able to establish itself above that level with a couple of days of higher prices. There is some minor to decent intra-week support now at 11.26-11.46 that should hold because of all the positive news and chart action seen.
Rallies up to 12.29 are highly likely now, but in reality SVNT the resistance of consequence is not found until $13 is reached and even then that resistance is from previous lows and not previous highs, making it susceptible to being broken. Nonetheless, even if $13 is the only objective, with the support at 11.26/11.46, a purchase can be made with a good risk/reward ratio.
Purchases of SVNT between 11.47 and 11.52 and using an 11.20 stop loss and a 12.97 objective, will offer a 4-1 risk/reward ratio. >p>
My rating on the trade is a 3.25 (on a scale of 1-5 with 5 being the highest).
Other Mentions:
The following stocks should be watched this week to see if they reach the desired entry points.
Sales:
TGT - Desired area to short @ $51
Purchases:
CRUS - Desired area to purchase @15
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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 $7507 using 100 shares per mention (after commissions & losses) Closed out profitable trades for April per 100 shares per mention (after commission)
AMZN (short) $176
Closed positions with increase in equity above last months close. TRW (short) $33 Total Profit for April, per 100 shares and after commissions $209 Closed out losing trades for April per 100 shares of each mention (including commission)
LVS (short) $90
AMZN (short) $68 AMZN (short) $174 JNPR (short) $67 LVS (short) $152 FFIV (short) $109 SGEN (short) $38 Closed positions with decrease in equity below last months close.
IR (short) $193 Total Loss for April, per 100 shares, including commissions $911 Open positions in profit per 100 shares per mention as of 4/30
ABB (long) $218 SGEN (short) $9 Open positions with increase in equity above last months close.
SVNT (long) $302 Total $529 Open positions in loss per 100 shares per mention as of 4/30
MMM (short) $109
MCD (short) $192 Open positions with decrease in equity below last months close.
ELON (long) $248 Total $890 Status of trades for month of April per 100 shares on each mention after losses and commission subtractions.
Loss of $1063
Status of account/portfolio for 2011, as of 4/30Loss of $8570 using 100 shares traded per mention.
DCTH had strong follow through to the downside this past week breaking below the support that was in effect prior to the announcement of drug approval in Europe. Nonetheless, the stock was able to stem the selling by midweek and did generate a mini rally at the end of the week that caused the stock to close only slightly below the important 200-week MA, currently at 7.20. The close at 7.07 was not sufficiently low to say the line was broken, but certainly any red close next Friday would be very negative. On the daily closing chart, the stock needs to close above 7.18 by at least 10 points to negate the break of important daily close support at that price. In addition, the 50-day MA is currently at 7.30, which means the 7.20 to 7.30 level, on a daily closing basis, is pivotal this week for the stock. Any daily close below 6.91 on intra-day break below 6.77, will likely thrust the stock down to the 6.00 level where support is decent. Probabilities favor the downside, but not aggressively so.
FCEL had an inside week where no decisions were made in either direction. The stock traded most of the week between 1.70 and 1.75 and that area is definitely considered a general but important pivot point. Traders seem to be awaiting fundamental news before doing anything as chart-wise the stock is now in "limbo". With no chart direction seen right now, there is nothing to do but wait for news. SVNT once again made a 4-month weekly closing high this past week and shows desire to go further to the upside. The stock did get up to a weekly close resistance level of some consequence at 11.73-11.80 where some previous low weekly closes of consequence are located. Nonetheless, low closes are never considered strong resistance and further upside is likely to be seen. The stock now has no intra-week resistance until 12.29 is reached and even then that resistance is at best minor to decent. Upside objective is 13.00 where the 50 and 100 week MA's are located. In addition, at that price there is a previous high as well as a slew of previous low closes of consequence. Strong support will now be found at 10.43 and minor to decent support will be found between 11.26 and 11.46. Probabilities favor further upside. ELON had a positive week getting above last week's high at 9.34 as well as above the 20 and 100 week MA's. The stock closed right on the 100-week MA and if the stock closes in the green next week, new buying will be seen. For now, resistance is found at 9.72 and at 9.86. If the stock is able to get above 9.86, further upside will be seen with at least a 10.30 objective. Support is now decent at 9.00. With the indexes likely heading higher, stock should see further buying this week. STP continues to straddle the 50-week and 200-day MA's, currently both at 9.00. The stock attempted to rally on Friday but ran into strong resistance at 9.50, causing the stock to fall and close in the red. On a daily chart, the action will be seen in a negative light, likely thrusting the stock back down this coming week to at least the 8.65 level if not down to 8.30. Nonetheless, the stock was able to close on Friday right on the MA's lines, leaving the decision open as to what the coming direction will be. Probabilities seem to favor the upside slightly, but the key word is "slightly. A break above 9.55 or below 8.30 will likely generate further action in that direction. MCD closed above the most recent high close at 77.38 and should be moving higher this coming week, with either 79.21 to 79.90 as the objective. The stock has been showing trading ranges of about $2 every week and based on the possible objectives, the 77.12 to 77.90 level should be the low this coming week. As such, short positions should be liquidated on any drop below 77.90 and re-instituted on a rally close to the $80 level. It should be mentioned that the stock closed on Friday at the same previous all-time monthly close seen in November at 78.30 and if the stock closes lower in May, it will show up as a double top on the monthly chart. With the probable May-Oct correction likely to be seen this year, there are good probabilities that the stock will build that double top and that would mean a drop down to at least the $70 level would likely occur. Weekly chart continues to look toppy but some of the bearish formations have been alleviated. Nonetheless, the stock still looks like a good short for the next few months. Nonetheless, liquidating the short positions if the stock gets below 79.90 and looking to re-short at the higher levels seems to be the best option available. SGEN did follow up on last week's positive reversal and broke above a minor resistance at 16.44 to close near the highs of the week. The 14.86-14.94 level is good support and the 17.39/17.45 level good resistance. A break of either of those levels will likely thrust the stock further in that direction. Nonetheless, based on the close on Friday as well as the probabilities of the indexes heading higher next week, it is likely the upside will be the direction chosen by the traders. The short mention given on Friday was a bit rash and unless the stock heads immediately lower on Monday, scratching the trade is likely the best option. ABB had a strong week after the stock got above the minor resistance at 26.30. The stock closed on the highs of the week and further upside is likely to be seen. No resistance is found until 28.70. Nonetheless there is a previous low at 28.97 from Jul08 and a previous high from Nov07 at 29.23 that give that area a bit more strength. Stronger resistance is found at 30.20 and then at 32.08. The stock is likely to get up to at least 28.50 but between there and 32.08 it is a guess at this time as to how high the stock will go. Support will now be decent between 25.84 and 26.30. MMM made new all-time highs last week and there is no resistance above. With the indexes having closed positively on Friday, further upside is likely. Short positions should be liquidated unless the stock opens below the previous high at 97.00 and even then the stock is likely to go higher. If the stock does get below 95.85, then consideration can be given to keeping the positions on. AMZN had a very strong week after the stock rallied in spite of the worse than expected earnings report. The stock made a new all-time high and closed near the highs of the week, suggesting that further upside will be seen this coming week. The 191.40 level is support and the 197.80 level is resistance. The stock shows a possible flag formation that if broken (a rally above 197.80) gives an objective of 210.00. Probabilities strongly favor the upside as forced margin call liquidations are likely to be seen on Monday and Tuesday, especially if the stock gets above 197.80.
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1) ELON - Purchased at 9.41. Averaged long at 9.19 (4 mentions). No stop loss at present. Stock closed on Friday at 9.51.
2) DCTH - Long at 5.78. No stop loss at present. Stock closed on Friday at 7.07.
3) FCEL - Averaged long at 1.7625 (4 mentions). Stop loss now at 1.63. Stock closed on Friday at 1.71.
4) SVNT - Averaged long at 9.686 (3 mentions). Stop loss now at 9.90. Stock closed on Friday at 11.62.
5) STP - Averaged long at 9.345 (2 mentions). No stop loss at present. Stock closed on Friday at 8.97.
6) ABB - Purchased at 25.31 Stop loss at 24.97. Stock closed on Friday at 27.49.
7) SGEN - Covered at 15.87. Shorted at 15.64. Loss on the trade of $23 per 100 shares plus commissions.
8) MCD - Shorted at 76.35. No stop loss at present. Stock closed on Friday at 78.31.
9) MMM - Shorted at 96.45 and at 96.98. Averaged short at 96.665 (2 mentions). No stop loss at present. Stock closed on Friday at 97.21.
10) SGEN - Shorted at 16.70. Stop loss at 17.55. Stock closed on Friday at 16.61.
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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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