 |
 |
 |
 |
 |
 |
Issue #226 
May 15, 2011 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
|
| Indexes Pause but Negative Signs Remain.
DOW Friday closing price - 12638
The DOW ended up having an uneventful inside week (higher lows and lower highs) leaving traders without a clear short-term direction and wondering what needs to happen to push the index in one direction or the other from here on in. Nonetheless, the reversal signal given the previous week, the failed intra-week rally, as well as the red close on Friday, suggests the bulls have run out of ammunition and the further downside is the most probable scenario.
On the daily chart, the DOW came very close on Friday to giving a sell signal. Had the index closed below 12584, a sell signal would have been given but even though the index traded around that level for the last 3 hours of trading on Friday, the bulls were successful in generating a close slightly above that level, leaving questions still unanswered.
On a weekly closing basis, resistance is minor at 12810, minor to decent at 12986 and decent to strong at 13058. On a daily closing basis, resistance is minor at 12695, minor to decent at 12760, and decent at 12810. On a weekly closing basis, support is minor at 12341 and decent at 11858/11893. On a daily closing basis, support is minor at 12584 and minor again 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.
Though the week was relatively uneventful, the DOW did successfully retest the 34-month daily closing high at 12810 with a high close at 12760 on Tuesday and another high daily close at 12695 on Thursday. With the index now sitting with 2 successful retests of the high the probabilities now favor the index breaking down this coming week, unless there is a positive fundamental piece of news over the weekend. Any daily close below 12584, would be a sell signal that would bring in profit taking as well as stimulating new short positions being put on.
The 12584 level has one additional meaning as a close below that level would not only be a sell signal on the daily closing chart but also a break of the 20-day MA, currently at 12600, which has held well since the last time it was broken back in the last week of February. Since March 22nd, the index has been generally successful in staying above the line keeping the bulls buying and the uptrend intact. A close below 12584 would be a double sell signal and with the May-Oct seasonal correction period likely now starting, such a signal would probably be adhered to by the traders and no big dip buying, as has been seen in the past, would occur.
The first downside objective on a daily closing basis would be the 2 previous daily closing highs at 12391 and 12426. On an intra-week basis, though, the DOW would likely drop down to the 50-day MA, currently at 12344. The previous daily closing highs would be a natural downside objective for this coming week if only to test the validity of the recent breakout which took the DOW up to the 12875 level and a test of the strong resistance up at 13000. With the previous week's trading being having been 355 points, and this coming week likely to mimic that trading range, the probabilities are decent that the index will see a high for the week at 12700 and a low of 12345.
To the upside, the 12695 level (on a daily closing basis) must now be considered important resistance as it the second successful retest of the high, as well as an area (12700) where general resistance is normally found. A close above 12695 would likely stimulate some new technical buying and an attempt to take the index up to the 13000 level. With the time period for the correction starting being sometime between the first of May to the first of June, there is still a chance the bulls will be successful in keeping the rally going up for another week or two, especially since no sell signal has been given yet.
On a longer term basis (1-3 months), if a sell signal is given and the May to Oct correction period starts or has started, it is likely that 11635 in the DOW would be the downside objective, to be reached somewhere between July and August. At that level there is a previous low of consequence from Jan08 as well as where the 50-week MA is likely to be in about 2 months. In addition, the most recent low of consequence was 11555, and it is unlikely that level will be broken unless the uptrend is totally over (unlikely). A correction down to the 11635 level would be 10% and that fits in well with what the expected seasonal correction will be.
The trading action seen in the DOW this past week suggests that the index is now heading lower and that the correction has started. Nonetheless, with the inability of the bears to generate the sell signal on Friday, doubts still remain. There are no important economic reports due out this week and under those conditions (no scheduled catalysts) the bulls have been successful in the past in generating rallies. As such, probability numbers are vague. By the same token, having closed on Friday only 10 points above the support level at 12584, a red or green close on Monday will be highly indicative of what the traders will do the rest of the week.
NASDAQ Friday closing price - 2828
The NASDAQ confirmed the failure to follow through signal given the previous week with a second close below the previous high close at 2833, suggesting that the index is heading lower. Nonetheless, the index had an inside week (higher lows and lower highs) and therefore the key reversal signal given was not confirmed as there was no follow through to the downside on the intra-week chart. Such action leaves questions still unanswered as to the direction for this week, though probabilities still slightly favor the bears.
The NASDAQ, just like the DOW did generate 2 successful retests of the daily closing high at 2873, with a close on Tuesday at 2871 and a close on Thursday at 2863. It can also be surmised that if the index gives a sell signal (a daily close below 2814) that a double top may have been built with the 2873/2871 closes.
On a weekly closing basis, resistance is minor to decent at 2873, very minor at 2887 and at 2917. On a daily closing basis, resistance is minor at 2863 and minor to decent 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 to decent at 2814, minor again at 2764, and minor to decent between 2722 and 2745.
It can be said the NASDAQ treaded water this past week as nothing of consequence occurred. Nonetheless, it can also be said that the probabilities increased in favor the downside, by a slight margin, inasmuch as the bulls were unsuccessful in negating the previous week's failure to follow through signal. In addition, what was accomplished this past week are the 2 successful retests of the high which will start to weigh heavily on the index if no positive fundamental news that stimulates new buying is seen.
Like with the DOW, the NASDAQ also closed on the 20-day MA, currently at 2828, and if the index closes in the red on Monday, selling will increase, likely pushing the index down to the low 2800's and the daily close support at 2814. A close below 2814 would be a sell signal likely causing drops down to the 2735 to 2774 area, where stronger support is found. The 50-day MA is currently at 2774, the 100-day MA is currently at 2755, and a strong previous daily close support is at 2735.
To the upside, minor resistance on a daily closing basis is now found at 2863 and decent to strong resistance between 2873 and 2871. Any close above 2873, will bring in new technical buying and an attempt to reach the 3000 level.
The NASDAQ did close near the lows of the week and follow through to the downside is likely. The low 2 weeks ago was 2804 and that is considered short-term important support on the chart. A break below 2804 suggests the index will drop down to the 2700-2725 level where the next support of consequence on the weekly chart is found. The index does have an open breakaway gap between 2746 and 2785 and if the index is able to get below the 2804 level, that area, and closure of the gap, will become a magnet.
SPX Friday closing price - 1337
The SPX has now closed 2 weeks in a row below the previous high weekly close seen in February at 1343. That level, which was the 75% Fibonacci retracement number, stood inviolate for 10 weeks and now the index, after breaking to the upside, has closed below that level 2 weeks in a row, giving and confirming a failure to follow through signal.
The SPX is also the weakest fundamentally as the financial industry has been seeing the most selling during the past 2 weeks due to high probability of defaults occurring in Greece, Portugal, and maybe even in Spain. Such defaults would weaken the Euro against the dollar and make our goods more expensive to sell, likely causing profits to fall across the board to any companies that sell internationally. In addition, banks are starting to see the possibility of an end to zero interest rates coming within the next 6-9 months as inflation is starting to wake, and definitely the strongest hit with a raise in interest rates would be the financial community.
On a weekly closing basis, resistance is minor at 1363, decent to strong at 1395 and strong at 1425. On a daily closing basis, resistance is minor at 1348, minor again at 1357, and minor to decent at 1363. 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 minor to decent 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.
Like with the other indexes, the SPX generated 2 successful retests of the recent 34-month high daily close at 1363, with a close on Tuesday at 1357 and a close on Thursday at 1348, as well as closing on Friday at the 20-day MA, currently at 1337. By the same token, like the DOW the index closed on Friday just a few points above what would be a sell signal should the index generate a daily close below 1335.
As mentioned in previous newsletters the SPX does have a "rare" gap between 1312 and 1319 that would become a major magnet should the index give a sell signal. The index is not known for generating gaps and based on the inability of the index to keep the uptrend intact, the probabilities of the gap being closed are very high. Tuesday's high at 1359 must be considered important resistance this week because if broken, resumption of the uptrend and the 1400 objective would once again take center stage.
Nonetheless, with all the fundamental problems the financial community is experiencing, not only here but internationally, the probabilities favor the downside, at least for a drop back down to the 1300 level. A red or green close on Monday should be a decisive factor for what the index does the rest of the week.
The indexes were unable to negate last week's failure to follow through signal, in spite of repeated attempts by the bulls to regenerate the uptrend this past week. Confirmation of the reversal seen 2 weeks ago was not given, but then again no negation of the reversal was given either, suggesting last week was just a temporary pause to test the highs successfully on the daily charts. No economic reports of consequence are due out this coming week and the important earnings reports are out, giving the bulls little ammunition with which to stage a rally. The entire market seems now poised for the slow down expected to be seen in the summer months.
All indexes attempted intra-week rallies this past week but failure was the key word. The end result of the rallies were successful retests of the recent high, giving chart reasons to believe that a top has been built, at least on the daily chart. Closes near the lows of the week suggest that further downside will be seen this coming week and if that happens, sell signals will be given right across the board.
|
Stock Analysis/Evaluation
|
CHART Outlooks
Though nothing was decided this past week, the probabilities still favor the downside. This week there will be 2 new sell mentions as well as one carryover from last week with a stock that did not reach its desired entry points.
The 2 new mentions have very good risk/reward ratios, though the probability ratings are not that high. Neither of the stocks is very sensitive to what the indexes do, as such there is always a risk that the stocks will move up even if the indexes go down. Nonetheless, they do have strong chart reasons to be mentioned as sales for this week and "enough" sensitivity to the indexes that if they do fall, they will be somewhat affected as well.
SALES
HANS Friday Closing Price - 66.50
HANS engages in the development, marketing, sale, and distribution of beverages in the United States and internationally. The price of the stock is closely tied in to the margins of profit made in a very competitive market and with the price of commodities having seen a strong run up recently, as well as inflation rising everywhere in the world including the U.S., the company recently announced that margins were beginning to shrink. Such an event could signal a temporary top to this strong 3-year uptrend.
HANS received a better than expected earnings report on May 6th that caused the stock to rally and make a new intra-week all-time high at 68.58, breaking the previous all-time high at 68.40. Nonetheless, the rally failed to generating any new buying as the stock fell back down the same day to close to close $2.50 below the previous all-time high daily close at 68.10 (closed at 65.64). The stock has attempted to generate new buying for the past 6 trading days but has been unable to get back up to the May 6th intra-day high or even reach the previous daily high close at 68.10 or even the weekly high close at 67.86, generating only a 66.50 daily and weekly high close last Friday.
On a weekly closing basis, resistance is strong at 67.86. On a daily closing basis, resistance is strong between 68.00 and 68.10. On a weekly closing basis, support is minor 67.74 and at 61.59. Below that there is minor support at 59.00 and minor to decent at 55.39. Decent to strong support is found at 50.95. On a daily closing basis, support is minor 65.04 and minor to decent at 61.94. Below that level there is minor to decent support at 59.00.
Even though the earnings report of HANS was better than expected, it was mentioned in the release that costs have begun to increase and margins decline. This is probably the reason why the stock was unable to hold on to its opening gain and fell back almost $3 during the day of the report. The stock has maintained its gains during the past 6 days and even generated new short-term daily closing highs. Nonetheless, the daily and weekly close resistance at 68.10 and 67.86 still loom above and with the indexes likely starting to correct, it seems like a difficult task for the bulls to achieve making new all-time daily and weekly closing highs.
To the downside, support is very minor as the stock has moved almost straight up since the $55 level, with one minor exception the last week of April when the stock, prior to the report moved down $5 from a high of 66.51 to a low of 61.51, probably anticipating the report would not be positive. Below 61.51 there is psychological support as well as from a previous intra-week high at 60.00. Nonetheless, below the $60 level there is nothing until the $55 level is reached, and if the stock gets down that low the $50 psychological support could become a strong magnet, drawing the stock down to that level.
HANS does show a breakaway/runaway gap formation with the breakaway gap being between 57.82 and 58.16 and the runaway gap was created right after the earnings report between 61.51 and 64.10. If the stock fails to get above the strong resistances above, and so far 6 days after the positive earnings report the stock has failed to do so, those gap areas will become magnets and draw the sellers in, especially if the indexes are correcting. As such, drops down to the $55 level are viable and maybe even probable, if this scenario comes to pass.
HANS did close near the highs of the day and the week on Friday and further upside above last week's high at 66.96 are likely to be seen this coming week. A retest of the 68.58 level is likely to be seen with the stock probably rallying up to the 67.86 weekly high close seen in Oct07. A rally up to that level will offer a very attractive risk/reward ratio using the failed all-time high at 68.58 as a stop loss point.
Sales of HANS between 67.00 and 68.00 and using a stop loss at 68.68 and having an objective of 54.75 will offer a risk/reward ratio of at least 7-1.
My rating on the trade is a 3.5 (on a scale of 1-5 with 5 being the highest).
ACOR Friday closing price - 26.05
ACOR is a bio-tech company that has a drug that helps people with MS to walk. Nonetheless, the stock has been in a strong and well-defined downtrend since May10 (1-year) when the stock made an all-time high at 40.47. Since that high, the stock has dropped all the way down to the most recent low at 20.43 seen in February. Bio-tech companies are prime objectives for sellers as so many of them fail or new drugs are found that make previous drugs obsolete. The company started trading in Feb06 at 7.45.
It is important to note, though, that for the past 269 weeks (4.5 years) ACOR has traded a total of 79% of the time (212 weeks) between $15 and $29 and with the stock having broken what had to be considered strong support at 28.50 back in October, and having had the stock test that level successfully just 4 weeks ago, after it was announced that their patent might be extended, but then dropping strongly based on the most recent earnings report, the probabilities of the stock now heading back down to the $15-$20 level again are very high.
On a weekly closing basis, resistance is minor to decent at 27.67, minor at 27.95 and decent to strong at 29.15. On a daily closing basis, resistance is minor between 26.01 and 26.19, minor to decent at 27.56, and strong between 28.95 and 19.15. On a weekly closing basis, support is minor to decent at 24.42, minor at 21.95 and minor to decent at 20.66. Strong support is found between 15.96 and 17.02. On a daily closing basis, support is minor 25.05, decent at 23.93, and strong between 20.97 and 21.06.
As is the case with most biotech companies, ACOR has shown quite a bit of volatility since it started trading back in 2006. The stock on April 14th generated a strong rally of over $8 just on the news that its patent "might be" extended. Nonetheless, the stock fell $5 2 weeks ago week based on a disappointing earnings report. The stock is presently rated a "hold" by Zachs Investment Research as they stated "We expected investors to remain focused on sales ramp-up and its approval in the EU community". With sales pressure usually present in biotech companies and the indexes likely getting into a correction, the probabilities of the stock trading within the trading range mostly seen over the past 4.5 years, and likely visiting at least the $20 level, if not down to $16-$17, are high.
ACOR, just after the patent news rallied up to the resistance level up at $29 (got up to 29.21) but failed to get above. At that same level the 50-week MA is located and though the stock traded in that vicinity for the next 4 weeks, the 29.21 level and the 50-week MA were never broken, suggesting that at this time the 1-year downtrend continues. The stock took a tumble 2 weeks ago when the earnings report came out, generating a negative breakaway gap between 27.02 and 26.27 that suggests the further downside is likely to be seen at this time. The stock did test the gap area on Friday with a rally up to 26.37 and if the stock starts to go back down on Monday, in conjunction with the indexes, the chart will once again turn strongly short-term negative.
As far as support is concerned, the stock just last week got down to the 50-day, currently at 23.90, as well as to the 20-week MA, currently at 24.40, and bounced off of it, generating a successful retest of those 2 lines. Nonetheless, the stock is now at the important 26.50 pivot point, as well as to the breakaway gap, and if the stock fails here, the support levels will likely break taking the stock down to the psychological support at $20 and the daily close support at 20.60. During the past 6 months ACOR has traded 50% of the time below 26.50 and with the stock presently under selling pressure once again, the probabilities do favor the stock staying below that price. On the weekly chart, the weekly close support is at 20.66 but that support is only considered minor to at best decent suggesting that if weakness is seen and the indexes get into a strong correction, drops down to the strong weekly close support between $16 and $17 could be seen.
Though the stock is sensitive to fundamental news, there doesn't seem to be any news in the immediate horizon that could re-stimulate new buying at this time. With selling pressure normally present in biotech stocks, and the indexes likely heading lower, shorting of the stock seems to be the best play at this time.
Sales of ACOR between 26.30 and 26.50 and using a stop loss at the closure of the breakaway gap up at 27.69 and having an objective of at least 20.00, if not $17, will offer at least a 5-1 risk/reward ratio.
My rating on the trade is a 3 (on a scale of 1-5 with 5 being the highest).
AKAM Friday closing price - 33.95
AKAM is showing a strongly bearish short-term (2-4 months) chart formation which in conjunction with the indexes possibly having topped out, projects to much lower prices over the next few months. From Nov08 to Dec10 the stock was in a clearly defined uptrend that took the stock from a low of 9.25 to a high of 56.45. Nonetheless, the stock failed to take out the Feb07 high (10-year high) at 59.68 on that rally, contrary to what many other stocks have done (make new long-term highs), and the stock has dropped indicatively since.
AKAM now shows a very bearish breakaway gap between 47.83 and 43.56 seen in February, as well as a runaway gap between 40.22 and 35.83 seen 2 weeks ago, which both came on the heels of disappointing earnings reports. In addition, the stock built an inverted flag formation from February to the end of April that has now been broken and which projects down to the 27.25 level.
On a weekly closing basis, minor resistance is found at 35.19, very minor at 36.19, and decent to strong resistance between 39.67 and 40.33. On a daily closing basis, minor to perhaps decent resistance is found between 34.96 and 35.17, minor at 38.45 and decent to strong at 40.98. On a weekly closing basis, very minor support is found at 34.43, minor again at 30.13 and decent to strong at 27.00. On a daily closing basis, support is minor 33.46. No other recent daily close (last 12 months) is found below.
AKAMbroke and closed slightly below the 100-week MA 2 weeks ago, currently at 34.90, and in the process broke below the bottom of the inverted flag formation which was at 34.60, projecting a drop down to 27.25. The closest support is the 200-week MA, currently at 30.65, but then again at that level there are no previous lows of consequence, making the support tenuous at best, especially on an intra-week basis. With the indexes also likely to be heading lower, the probabilities of the stock heading lower at this time are high.
AKAM shows decent resistance between the previous week's high at 35.83 and up to 36.69 as there have been a total of 6 previous highs (7 with last week's high) and one previous low of consequence between those 2 levels over the past 5 years, making that a resistance level of some note, especially with disappointing earnings 3 weeks ago and an index market that seems to be heading lower.
It should also be mentioned that prior to the earnings report AKAM was already having problems going higher as it had moved up to 41.25 and stopped, failing to go above a previous high of consequence from Oct07 at 41.45. Having gone up to that level and not been able to break above it, gives the downtrend even more strength.
As far as support is concerned, the 200-week MA is currently at 30.65, offering weekly close support of some consequence. In addition, the $30 level has to be considered psychological support. Nonetheless, the true support is found in the lows seen in Sep07, Jan08 and Mch08 at 27.75, 25.13, and 27.32 respectively. On a weekly closing basis, those lows can be summed up with a 27.00 weekly closing low seen in Jan08 as the strong support, fitting in well with the inverted flag formation objective of 27.25.
Sales of AKAM between 35.51 and 36.00 and using a stop loss at 37.22 and having an objective of 27.25, offers a risk/reward ratio of 5-1.
My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the highest).
|
Updates
|
| Updates on Held Stocks |
Closed Trades, Open Positions and Stop Loss Changes |
| DCTH generated a new 9-month weekly closing low, closing on Friday 2 points below the previous weekly closing low at 6.29 (closed at 6.27). By the same token, 2 points is not considered enough of a break to be indicative, so questions remain especially since the previous intra-week low at 6.02 was not reached. The chart, though, is starting to look short-term weak as the stock has continued to close in the red, now for the last 5 weeks in a row, and the bulls have been unable to generate any kind of buying of consequence. The intra-week support at 6.20/6.25 is decent and if the stock is able to rally on Monday and get above Friday's high at 6.43, as well as close in the green, it is possible that new buying will be seen. Nonetheless, there has been no evidence that there is any buying interest at this time and a break below the recent 6.20 low is likely to cause the stock to break the 6.02 intra-week support and drop down to the 5.75 to 5.90 level. A rally above 6.80 would take most of the selling pressure away. Probabilities favor further downside. FCEL continued to generate positive moves, though measured by inches instead of by feet. The stock was able to close above the 1.57 daily close resistance level this past week and confirm the break with 2 subsequent closes above that level. Nonetheless, this is only on the daily chart as on the weekly chart the stock needs to close above 1.70 to generate a failure to follow through to the downside and that has not yet been done. By the same token, the stock did generate a green close on the weekly chart, making last week's close at 1.52 a successful retest of the 1.50 support level as well as of the 50-week MA, currently at 1.56. There is decent intra-week resistance between 1.63 and 1.64 and though the stock got up to that price on Friday, it was unable to get above the resistance. A break above 1.64 by at least 3 points should generate a rally up to the 1.79 level. Any break below 1.47 would now be a strong negative. SVNT had an inside week but did generate a new 23-month weekly closing low. Nonetheless, the inside week suggests that the selling is drying up and that the stock is not likely to generate any further strong drops, though a bit more weakness could be seen over the next couple of weeks causing the stock to get slightly below 8.17 (perhaps down to 8,00) before some buying would be seen. By the same token, the high daily close at 9.09 seen this past week is likely to be strong resistance for the next couple of weeks. Probabilities favor the stock trading between $8 and $9 for the next 2-6 weeks. ELON was successful in generating another green weekly close on Friday but on the daily closing chart the stock is showing a slight failure to follow through signal, having made a new 11-month daily closing high, above the previous one at 10.50 (closed at 10.61), and then closing below the 10.50 level on Friday. By the same token, the stock has now generated more than 3 daily closes at the 10.60 to 10.62 level over the past 2 years and that has increased the probabilities the stock will break out and head higher as triple tops are usually taken out "ultimately". On the other side of the coin, if the indexes do head lower (now likely) the stock is somewhat sensitive to what the indexes do and will likely see some selling if they fall. Drops down to the 9.90 to 10.07 level are likely to be seen if the indexes fall. Nonetheless, the support at that level seems to be strong enough that even if the indexes get into a strong correction, the probabilities favor the stock holding up there. The weekly chart continues to look bullish and if the 10.71 high seen this past week is taken out, rallies up to the 200-week MA, currently at 11.38, will likely be seen. By the same token, any drop below last week's low at 10.02 would weaken the chart and a new chart evaluation would need to be made. STP continues to wallow in limbo awaiting further fundamental news before deciding which direction to follow. The stock did not generate any kind of signal this past week as far as direction is concerned and the probabilities of the stock continuing to trade between 8.30 and 9.10 for the next week or two are high. It is evident on the chart that any break above 9.00 or below 8.00 will bring additional movement of consequence in that direction. MCD made new all-time weekly and daily closing highs. Nonetheless, the previous intra-week high at 80.94 was not broken even though a rally up to 80.91 did occur. The new all-time highs should cause liquidation of the short positions but with the indexes likely heading lower, it is possible the stock could generate a failure to follow through signal this coming week, and therefore as long as the 80.94 intra-week all-time high is now broken, shorts should be kept at least for this coming week. The stock is not overly sensitive to the indexes so even if they fall the stock may not fall. As such, a new high above 80.94 by at least 10 points should generate liquidation. Friday's low at 80.38 is short term important because if broken, some selling will come in and the stock will likely fall back to the 79.70 to 80.00 level. Two closes in a row below 80.38 would generate a failure to follow through signal. Probabilities favor the upside. ABB is showing signs of weakness and a daily close below 25.79 would generate a short-term sell signal, with 24.70 as the minimum objective. The stock should show support between 25.00 and 25.29 but if the stock closes the runaway gap between 24.97 and 25.15, selling pressure will increase. By the same token, the stock will literally need to generate a weekly close below 24.45 to turn negative. Stops should be placed at 24.97 as a closure of the runaway gap will likely cause closure of the breakaway gap between 24.22 and 24.81. By the same token, closure of those gaps will not be considered a major long-term negative, but simply short-term weakness. Overall the stock continues to show high probabilities of reaching the $30 area sometime in the near future, likely before the end of the year. JPM generated a sell signal on the weekly closing chart, closing below the previous weekly close support at 44.54. No support on the weekly chart is found until the 50 and 100 day MA's, currently both at 41.50, is reached. On the daily chart, the 200-day MA is currently at 42.10 and drops down to that level are highly likely, based on the close on the low of the day and the week on Friday. The support at 41.50, though, is only from MA's and not from previous lows, and therefore suspect. If the indexes do start to break down as expected, the probabilities of the stock heading down to the strong support at $37 will be high. Financial stocks are particularly under pressure at this time. Further downside with at least a drop down 41.50 to 42.00 is likely to be seen this week. UTX generated another red weekly close after the key reversal seen the previous Friday. Nonetheless, the key reversal was not confirmed as the stock was able to stay above the last week's low at 87.90, generating an inside week much like what was seen in the DOW. Nonetheless, the stock being a member of the DOW, it is likely to mimic what the index does this week and that means the probabilities favor the downside. Important intra-week support is seen at 87.90, if broken drops down to the $85 level would become likely. The stock has an open breakaway gap between 82.47 and 84.00 that will become a magnet if the stock closes below the previous all-time high daily close at 85.66. Any daily close above 90.00 would now be considered a strong positive and a rally up to the $100 level would likely then occur. Probabilities favor the downside. VZ has been successful in holding above the 50-day MA, currently at 37.20, for 95% of the time since July of last year. Nonetheless, for the past 2 weeks the stock has tested the line on 4 occasions and closed on the line on Friday, meaning that a red close on Monday will cause a break of the MA to occur. Decent support on the daily and weekly closing charts is seen at 36.91, if the stock closes below that level a strong sell signal will be given and drops down to the 34.50 and the 200-day MA, will likely occur. A daily close above 37.57 would be a short term positive. Probabilities favor the downside. AMZN continued its uptrend with another new all time high weekly close on Friday and has not yet shown any selling of consequence coming in. Decent daily close support is found at 197.11 and minor support at 195.07. No sell signal can be given at this time unless the stock closes below the 197.11 level. The stock did generate a positive reversal on Thursday but failed to follow through on Friday generating an inside day. It is likely the traders are waiting to see what the indexes do on Monday before deciding what to do. Nonetheless, the probabilities do favor further upside.
|
1) ELON - Purchased at 9.41. Averaged long at 9.19 (4 mentions). Stop loss raised to 9.60. Stock closed on Friday at 10.37.
2) DCTH - Long at 5.68. No stop loss at present. Stock closed on Friday at 6.27.
3) FCEL - Averaged long at 1.7625 (4 mentions). No stop loss at present. Stock closed on Friday at 1.61.
4) STP - Averaged long at 9.345 (2 mentions). No stop loss at present. Stock closed on Friday at 8.52.
5) ABB - Purchased at 25.31 Stop loss at 24.97. Stock closed on Friday at 25.86.
6) UTX - Shorted at 90.46. Stop loss at 90.77. Stock closed on Friday at 88.98.
7) MCD - Shorted at 76.35. No stop loss at present. Stock closed on Friday at 80.74.
8) VZ - Shorted at 37.41. Stop loss at 38.52. Stock closed on Friday at 37.26.
9) SVNT - Long at 9.50. No stop loss at present. Stock closed on Friday at 8.83.
10) AMZN - Liquidated at 200.42. Shorted at 200.79. Profit on the trade of $37 per 100 shares minus commissions.
11) AMZN - Shorted at 201.67. Covered at 202.00. Loss on the trade of $33 per 100 shares plus commissions.
12) AMZN - Shorted at 205.03. Covered at 205.65. Loss on the trade of $62 per 100 shares plus commissions.
13) JPM - Shorted at 45.69. Stop loss at 46.17. Stock closed on Friday at 45.04.
Previous Newsletters
|
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. |
|
|
|