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Issue #216 
March 6, 2011 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Everything on Hold, Awaiting Further News!
DOW Friday closing price - 12169
The DOW had an inside week leaving all questions unanswered as to what the short-term will bring. The economic news was generally positive but high oil prices continue to weigh heavily on the market. With such mixed news, the index was unable to generate any kind of meaningful sign as to what to expect next week or even in the short-term.
The bears had an opportunity on Friday to deliver a meaningful technical blow to the DOW but at the end of the day the bulls were able to generate enough buying to close the index above the previous weekly close as well as slightly above the 20-day MA, currently at 12160, and push all decisions forward to this coming week, awaiting further news as to what may happen in the Middle East.
On a weekly closing basis, resistance is minor to decent at 12391, again at 12743 and decent to strong at 13058. On a daily closing basis, resistance minor at 12226, minor to decent at 12278 and decent at 12391. Above that level there is decent resistance between12684 and 12743 and strong at 13058. On a weekly closing basis, support is very minor at 12130 and again at 11823. Decent support is found between 11098 and 11101. On a daily closing basis, support is minor to decent at 12068 and minor to decent again at 11823, minor at 11731 and minor to decent at 11637. Additional support is minor at 11555/11565, and again at 11478.
The DOW has built a decent daily close resistance level at 12278 as well as a decent daily close support level at 12058/12068. A close above or below either of those levels will likely generate follow through in that direction. With the index having closed exactly in the middle of that range, Monday's starting action will likely be indicative.
Putting oil prices aside, the possibilities of the DOW having reached at least a temporary high continue to increase as inflation is beginning to be the main topic of conversation. Inflation would cause the Fed to start increasing interest rates, thus putting a strong brake on the rally. Economic reports continue to show improvement but are doing so on a declining rate basis, giving less fuel to the bulls in their desire for higher prices. As such, the possibilities of a temporary top at least being in place have increased.
By the same token, the problems in the Middle East are not likely to be resolved anytime soon, and though oil prices may stabilize it is likely that a barrel of oil will continue to trade around the $100 level. If that is the case, GDP will not be able to reach the expected levels that analysts have been banking on to keep the rally going.
The DOW is facing a week where economic reports will be at a minimum, and none very important until Retail Sales on Friday. As such, the week will be mainly dependant on oil prices and technicals. From that perspective, the bears have an edge.
From a technical perspective, having had an inside week and the previous week having been a down week, probabilities favor some further downward action, with the 50-day MA, currently at 11960/11970, as one of the objectives. Nonetheless, the index does show a possible bearish inverted flag formation on the daily chart, with the flag pole being the drop from 11393 to 11983 and the flag being the trading range back up to 12283, which was Thursday's high. A drop below 11983 would give an objective of 11863. This again would fit in with the previous correction seen in November where the index dropped 110 points below the 50-day MA for a period of 2 days.
One thing that can be said with a certain degree of certainty is that while oil prices remain above $100 a barrel, it is going to be very difficult to find traders that will feel comfortable in buying the DOW aggressively.
NASDAQ Friday closing price - 2784
The NASDAQ gapped up on Wednesday between 2763 and 2774 but was unable to generate any follow through to the gap on Friday, failing to go above Thursday's high and going below Thursday's low, increasing the probabilities of this recent gap being closed. Wednesday's bullish gap should have helped the bulls rally the index to close the bearish breakaway gap seen 2 weeks ago between 2823 and 2808 but the best the bulls were able to accomplish is a rally up to 2802. The action suggests that the failure-to-follow-through signal given the previous week after new 10-year highs were made is weighing heavily on the index. Without some fundamental help, the technical aspects of the chart seem to suggest that a top is now in place.
The NASDAQ has quite a few of the more popular stocks in the market, such as AAPL, AMZN, and NFLX, and it is important to note that Goldman Sachs downgraded AMZN this week, NFLX has given up close to 20% in value over the past couple of weeks, and AAPL has been unable to make new highs in spite of very good fundamental news. As such, the leader of the indexes during the past 3 years is starting to show definite signs of having reached a top, without any of the problems associated with oil prices having a major impact.
On a weekly closing basis, resistance is minor to decent at 2810 and decent at 2833. Above that no resistance is found until decent resistance between 2864 and 2887. On a daily closing basis, resistance is minor to decent at 2798, and decent at 2833. On a weekly closing basis, support is very minor at 27.891, minor at 2686 and then nothing until decent support at 2518. On a daily closing basis, support is decent at 2722 and again at 2737. Below that level, there is decent support between 2686 and 2689. Minor support is found at 2652 and minor to decent at 2617. Below that level, support is minor to decent at 2495 and decent to strong between 2460 and 2468.
The failure to follow through on the NASDAQ to the new 10-year weekly closing high seen the previous week at 2833 has to be considered a very important clue to the future of the index market. The NASDAQ has been the bell-weather for the indexes since 2008. The index did confirm the failure to follow through with a second close in a row below that level, and therefore the probabilities of a major high being in place have increased. If the index is able to generate a sell signal on the weekly chart with a close below 2737, it would suggest that the up-trend for the entire year is over and that the indexes would then work lower the rest of the year.
One of the keys for this week are the two gaps (one bearish and one bullish) and which one will be closed. The downward breakaway gap is certainly the more important of the two as it suggests a top in place. The bullish gap is important only from the point of view that the index has been on an uptrend and it should cause the bearish gap to be filled. Closure of the bullish gap is not all that meaningful but it would give the bearish gap even more strength and meaning.
It should be noted that the NASDAQ is still showing a high probability of a double top having been built on the weekly closing chart as the 2007 weekly closing high was 2825 and the close seen 3 weeks ago was 2833. As such, if the index is able to close below the most recent weekly closing low at 2686, the double top would be totally confirmed at the same time that a sell signal would be given. As such, a weekly close above 2833 or a weekly close below 2686 has a very high probability of signaling the trend for the rest of the year.
The NASDAQ had a red close on Friday making Thursday's close at 2798 into a successful retest of the strong psychological resistance at 2800. If there is no positive news over the weekend, the probability of the index getting down once again to the 50-day MA, currently at 2740 will be high. The daily close support at 2737 is quite important as it was on the 50-day MA and was the most recent low close. A close below that level would serve as a sell signal on the daily closing chart. To the upside, the gap between 2808 and 2833 is the big key. Closure of what seems to be a bearish breakaway gap would be a major victory for the bulls at this time. As such, the index is likely trading within a 100 point trading range between 2833 and 2733 that is meaningless.
SPX Friday closing price - 1321
The SPX had a very uneventful week trading within the previous week's trading range. Nonetheless, the index has now had 2 weeks in a row of having reached the 75% Fibonacci retracement level without being able to get above it, in spite of the fact the index shows no previous resistance here.
This past week, though, the SPX was mainly a follower and not any kind of a leader as it mimicked exactly what the DOW did without showing any indications on its own. In simple words, the financial industry was not a major concern or catalyst this week.
On a weekly closing basis, resistance is minor to decent at 1343 and again minor to decent at 1395 and decent to perhaps strong at 1425. On a daily closing basis, resistance is minor to decent at 1330 and decent at 1343. On a weekly closing basis, support is minor 1276, minor again at 1236 and decent at the 200-week MA, currently at 1190. Below that level there is no support until the 50-week MA is reached, currently at 1121. On a daily closing basis, support is now decent to perhaps strong at 1306/1307, minor at 1299 and decent at 1267 and minor again at 1255. Below that, there is minor support at 1235, very minor at 1223 and decent to perhaps strong between 1178 and 1184.
The SPX failed to follow through on the previous week's 32-month weekly closing high even though no previous resistance of consequence until 1395 was evident. The index failed to confirm the failure to follow through by being able to close above 1306, but did not negate the failure either by closing once again below 1343.
The SPX, like the DOW, was able to close above the 20-day MA, currently at 1316. Nonetheless, it took a strong effort by the bulls in the last 10 minutes of trading on Friday to get the index to close above the line. Such action is not a strong confidence builder for the bulls.
As far as support is concerned, the last 2 lows of consequence seen is at 1299 and at 1306. At 1306, the SPX has built an important and "pivotal" support base. A intra-week break below 1306, and even more so below 1299, in conjunction with a close below 1306, would be a strong sell signal. To the upside, the 1343/1344 level continues to be very important as it is where the 75% Fibonacci retracement is at. As such, you are looking at a 45 point trading range (1299 to 1344) that will likely determine the trend for the rest of the year.
The traders were unable to generate any kind of a clear signal this past week as the indexes traded mainly between the previous week's highs and lows. Oil prices continue to be a major concern and inflation worries are starting to creep into the psyche of the traders, causing the strong uptrend of the last 8 months to falter. Nonetheless, no clear signal has yet been given, one way or the other, as to the probable direction from here.
Oil prices will continue to dominate the week with $100 a barrel somewhat being a pivot price for the indexes. Economic reports are few this coming week with Retail Sales next Friday being the most important. Nonetheless, it is safe to say that the market will pivot around oil prices and nothing else.
The probability is high that the indexes will have some downward action this week as there is still some further room to the downside without causing any sell signals to be given. As such, the technical aspects have a high probability of being fulfilled even if oil prices don't go higher. It should be noted, though, that recent economic reports, though still positive, have begun to decrease in bullishness and therefore even if oil prices falter, the indexes won't necessarily rally.
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Stock Analysis/Evaluation
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CHART Outlooks
The market last week was unable to decide what will be the most likely direction for the next few weeks. Nonetheless, the fact the indexes had an inside-week trading range suggests that the most likely scenario for this coming week will be down. In addition, there are few fundamental reasons at this time for the bulls to be aggressive, but many potential events that could cause a strong sell off. As such, 3 of the mentions this week will be sales.
Nonetheless, there is one stock that is tied in to oil prices that has a very high probability rating as well as a high reward ratio, as well as a very low risk factor. With oil prices unlikely to take a drop in price, that stock seems to be a great purchase.
PURCHASES
BHI - Friday closing price - 69.73
BHI is a company that supplies equipment for oil drilling and exploration. Between 2005 and 2008 the stock traded between $50 and $90 but when the recession hit and oil prices took a fall down to the $30 level, the stock fell all the way down to $33. The stock subsequently traded back up to $50 and traded between $37 and $50 for 1 year. Nonetheless, once oil starting trading higher the stock was able to break above the $50 level and with oil trading above $100, the stock seems to be heading back to the previous highs at $90.
BHI broke above the Apr10 high at 54.80 in November and for the last 4 months has been on a tear. With no resistance of consequence until the $89 level is reached, there is plenty of room for the stock to continue moving higher before encountering any selling. In addition, due to the problems in the Middle East, the price of oil has a high likelihood of continuing higher, giving plenty of reasons to further oil drilling and exploration.
On a weekly closing basis, resistance is minor at 74.43, minor again at 78.25, and then nothing until decent to strong resistance is found between $87 and $88. On a daily closing basis, resistance is minor to decent between 71.19 and 71.50. Above that level there is no resistance until minor to decent resistance is reached at 81.14. On a weekly closing basis, support is minor at 67.13 and strong between 62.38 and 63.90. On a daily closing basis, support is minor to decent at 68.81 and minor to decent again at 66.67. Below that level, there is no support until minor support is found at 58.51.
BHI has been on a roll recently due to higher oil prices and the probabilities favor continuation of that trend. In addition, the stock does not show any resistance of consequence nearby. The fact the stock traded as high as 100.29 at the peak of the last run up in oil and traded up near the $90 for 2 years prior to that run up and for 1 year after the run up, suggests that with oil prices above $100, that the probabilities of the stock getting up near that level again are high.
BHI generated a spike up run of $11 6 weeks ago and for the past 6 weeks has been building an upward pennant that is strongly bullish, suggesting that the next run up will likely take the stock up another $11 in a matter of 1 to 2 weeks.
For the last 2 weeks, the stock has been trading between a low of 67.96 and a high of 71.90 with the $70 psychological resistance being the pivot point. The bears attempted last Wednesday to put a dent in the bulls' strength when the stock broke below a previous low at 68.05 with a drop down to 67.96. Nonetheless, the bears were unable to generate any follow through and the stock popped up to close up in the $70 demilitarized zone on Friday, suggesting that if oil prices don't fall over the weekend, that the stock will move higher.
With such lofty and viable objective to the upside and a clear support level near-by, the risk/reward ratio is excellent and the probability number high.
Purchases of BHI between 69.05 and 69.56, using a stop loss at 67.66 and having an objective of 89.05 will offer a 12-1 risk/reward ratio. If a less sensitive but stronger stop loss is desired, it can be placed at 65.77, making the risk/reward ratio at least 6-1.
My rating on the trade is a 4 (on a scale of 1-5 with 5 being the strongest).
SALES
DE Friday Closing Price - 92.35
DE made a new all-time high 2 weeks ago at 97.36 after getting above the previous all-time high made in April 2008 at 94.89. The new all-time high was impressive as it broke a major double top that was in play with the December 2007 high at 94.77. Nonetheless, the stock was unable to follow through on the breakout as 2 weeks later the stock closed "below" the previous double top weekly closing high at 92.28/92.68, giving a failure to follow-through signal. That failure signal was not negated this past week as the stock closed once again at the previous double top, but not above it.
DE had been in a major uptrend for the past 22 months having been as low as 24.51 in March 2009. With the stock having appreciated almost 400% in value over a period of 2 years and not having had a meaningful correction for the past 10 months (since breaking above the $50 level) has put the stock at risk of a strong move down if the indexes have in fact found a temporary top.
On a weekly closing basis, resistance is decent at 92.28/92.68 and strong at 95.42. On a daily closing basis, resistance is minor at 94.09, minor to decent at 94.42 and strong at 94.69. On a weekly closing basis, support is minor at 90.49, very minor at 88.91, and then nothing until decent support is found at 79.23. Below that level there is decent to perhaps strong support between 76.00 and 76.40. On a daily closing basis, support is decent between 88.28 and 89.06. Below that level, there is no support until minor support is found at 83.02 and minor again down at $80.
DE dropped a total of $8.66 the previous week from 94.89 to 86.23 as the failure to follow through signal was given and many of the bulls took profits. Last week, much like with the indexes, the stock failed to follow through on the previous week's weakness and ended up basically treading water but closing near the highs of the week and at the same level as the previous double top high weekly close between 92.28 and 92.68 (closed at 92.35). This suggests that the stock will follow whatever the indexes decide to do this coming week.
Unlike the indexes, though, DE has not yet generated a retest of the highs on the weekly chart and it is possible that the stock will show a bit of strength early in the week even if the indexes don't. The previous "intra-week" high seen in 2007/2008 was 94.77/94.89 and there is a decent possibility the stock will get up to that level this coming week. If nothing else, the stock closed in the upper half of the week's trading range and some follow through to the upside, above the week's high at 93.16 will likely be seen. Based on the daily chart, rallies up to at least 94.24 if not up to as high as 95.90, have a good probability of occurring. Nonetheless, as far as the weekly chart is concerned, any rally above 93.16 can be considered as an opportunity to sell.
DE did see a low of 86.23 (88.26 on a daily closing basis) 2 weeks ago and that support has to be considered a strong pivotal level. A break of that support will likely thrust the stock down to the $76 to $80 level. Drops down to test the recent low are highly likely even within a resumption of the bullish uptrend. As such, the short trade offers decent probabilities of success, no matter what the index market decides to do.
Sales of DE between 94.24 and up to 95.90, using a stop loss at 97.46, and having an objective of 79.47 will offer at least 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).
CIT Friday closing price - 43.36
CIThad a negative earnings report 3 weeks ago and took a spike drop from 48.04 to 42.12. In the process, the stock broke below the 100-day MA, currently at 44.40, and for the last 11 trading days has been unable to get above the line, in spite of several rallies seen in the indexes during that period of time. In addition, the spike drop has caused an inverted flag formation to be formed that gives an objective of 38.35 if the bottom of the flag at 42.12 is broken.
CIT had been on an uptrend since it emerged from bankruptcy in December 2009. Nonetheless, on January 14th of this year, the stock reached a high of 49.57 and has been on a short-term downtrend since. In addition, the stock broke and closed below the previous weekly closing high at 43.83 set last September and with the weekly close seen the previous week at 44.01 and last week's close at 43.36, that previous high weekly close has become strong resistance.
On a daily closing basis, resistance is decent at 44.01, minor at 44.96, and the nothing until minor resistance is again seen at 47.10. Above that level, there is decent resistance at 48.34 and strong at 49.01. On a daily closing basis, support is minor at 42.69 and again at 40.38. Below that level, decent support is found at 39.46.
CIT shows all kinds of good resistance on the chart at the 44.10 to 44.32 level, emanating from previous important highs, recent important highs, the 100-day MA, as well as from a clearly defined inverted flag formation. As such, the probabilities highly favor the stock heading lower, especially since the support levels underneath are minor until some decent, but mostly psychological support, is found at $40. In addition, the industry continues to be under general selling pressure as the financial community is still the laggard in the market.
CIT, as it is known today, has only been trading since December 2009 and the company has enjoyed a nice (but not great) run up in price because of the general up-trend in the market. Nonetheless, the most recent earnings reports show the company is not growing as expected and it is likely the stock is seeking the proper price level where it belongs.
CIT is showing a haphazard but viable Head & Shoulders formation that if the recent low at 42.12 is broken, project a move down to the mid $37's. With little support until the $40 level is reached and with strong resistance up in the low $44's, the probability rating for this short trade is high.
Sales of CIT between Friday's closing price of 43.52 and up to 43.96, using a stop loss at 44.42, and having a minimum objective of 39.72, will offer a 4-1 risk/reward ratio.
My rating on the trade is a 4 (on a scale of 1-5 with 5 being the highest).
AMZN Friday closing price - 171.67
AMZN has built a double top on the weekly chart up at the 191.60/191.40 level that has now been confirmed with a gap down seen the previous week as well as follow through to the downside this past week, below the previous week's low. In addition, the company is now facing a very real threat to its bottom line inasmuch as there has been a strong thrust by many states to start charging taxes for online sales. To finish it off, Goldman Sachs downgraded the stock 2 weeks ago.
AMZN also shows a breakaway gap between 185.13 and 184.72 as well as a runaway gap between 177.10 and 175.89. In addition, the stock broke below the 100-day MA, currently at 175.40, on Monday, and was unable to get above the line the rest of the week, suggesting that further downside is likely.
On a weekly closing basis, resistance is minor at 177.50 and again at 182.59. Major resistance is found at the double top at 188.75/189.25. On a daily closing basis, resistance is minor at 172.79 and at the 100-week MA, currently at 175.40. Above that level, resistance is minor at 179.49, at 184.45, and major between 190.42 and 191.25. On a weekly closing basis, support is decent at 171.14, minor at 162.82, and minor to decent at 153.71. On a daily closing basis, support is decent at 169.44/169.64. Below that, support is decent between 157.28 and 160.47 and decent again at 153.03.
AMZN has most likely built a major top that will be in place for a long time. Nonetheless, the short-term direction is still in question. Fundamentally speaking, there are a lot of reasons to believe that the stock will be getting down to the $150 area sometime this year and probably within the next 3 months, but the short term is still in question, depending on what the indexes decide to do. Support is strong at the recent intra-week lows at 166.90 and 168.47, holding up the weekly close double bottom at 169.464/169.44.
To the upside, AMZN has not yet tested the double top that was built a couple of weeks ago and if the indexes decide to re-start the up-trend they have been on for the last 8 months, the probabilities of the stock getting up to at least the $180 will be high. In addition, the double bottom on the weekly closing chart has to be an attractive sign for the bulls that the stock could generate a rally from here. Unfortunately for the bulls, the stock has not yet been able to distance itself from that level enough so that the short-term bulls can feel confident that the stock is heading higher. In addition, as long as the stock continues to trade below the 100-day MA, currently at 175.40, the bears will have the benefit of the doubt.
AMZN does pose an attractive "nibble at" trade this week that has a great risk/reward ratio but a so-so probability rating, due to the uncertainty about the index market as well as the potential for the recent double bottom to hold up and a rally to test the highs occurring. The most recent high at 174.46, the 100-day MA, currently at 175.40 and the runaway gap between 177.10 and 175.87 present an array of decent resistance levels that are within $1.50 of each other, offering a good chance they will hold in spite of the possibility of a rally to test the double top.
As such, a short trade "nibble" can be attempted.
Sales of AMZN between 173.13 and 174.00 and using a stop loss at 176.00 and having a minimum objective of $160, will offer a 5-1 risk/reward ratio.
My rating on the trade is a 2.75 (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 2/1 Loss of $3937 using 100 shares per mention (after commissions & losses) Closed out profitable trades for February per 100 shares per mention (after commission)
SKX (short) $278
Closed positions with increase in equity above last months close. FCEL (long) $1 Total Profit for February, per 100 shares and after commissions $279 Closed out losing trades for February per 100 shares of each mention (including commission)
JPM (short) $67
CHK (short) $60 AMZN (short) $93 AMZN (short) $188 JNPR (short) $11 JNPR (short) $44 CAT (short) $485 DD (short) $112 Closed positions with decrease in equity below last months close.
HD (short) $178 Total Loss for February, per 100 shares, including commissions $4142 Open positions in profit per 100 shares per mention as of 2/28
SVNT $27 Open positions with increase in equity above last months close. NONE Total $27 Open positions in loss per 100 shares per mention as of 2/28
ELON (long) $6
STP (long) $53 Open positions with decrease in equity below last months close. DCTH (long) $291 Total $350 Status of trades for month of February per 100 shares on each mention after losses and commission subtractions.
Loss of $4186
Status of account/portfolio for 2011, as of 2/28Loss of $8123 using 100 shares traded per mention.
Updates on Held Stocks
DCTH was able to withstand the last of the forced liquidations this past week and hold the lows made the previous week. Nonetheless, the stock was unable to generate a rally and ended up with an inside week and still below the important 100-week MA, currently at 7.25. Last week's trading range was 6.30 to 6.83 and the stock closed in the middle of the trading range at 6.54, leaving the door open for both the bulls and the bears to make further gains. Nonetheless, the forced selling is now over and the drop in price was close to 50% without any change to the long-term fundamentals of the company, suggesting that the upside is more likely to be seen at these prices. A daily close above 6.55 will give a small buy signal and likely generate a rally up to 7.25. A drop below 6.30 or a close below 6.32 would likely generate a weekly test of the 6.02 low. Probabilities slightly favor the upside.
FCEL had a relatively uneventful inside week but did close once again below the previous week's close (1.70 versus last week close at 1.74). Nonetheless, the stock was able to stay above the previous week's low at 1.55 and did generate a successful intra-week retest of the lows with Thursday's drop down to 1.63 and 2 subsequent days trading above it. By the same token, the stock failed to give any kind of a buy signal and stayed all week between the 20 and 50 day MA's, failing to give a clue as to the direction to be taken this coming week. A rally above 1.78, and more importantly above 1.82 would be a positive, while a break below 1.63 a negative. Chart formation is not clear as the formation itself could be considered potentially bullish as well as potentially bearish. Nonetheless, with such clear and narrow parameters, it is highly likely some decision will be made this week. SVNT had a strong week generating a breakout above the previous 5-week trading range that featured a 10.23 high. In addition, the stock was able to close on Friday "slightly" above the 50-day MA, currently at 10.35 (closed at 10.37). The stock has built a very strong support base and is starting to generate a short-term up-trend. The stock closed near the highs of the week suggesting there will be upside follow through this coming week. If the stock is able to get above Friday's high at 10.49, there is only minor resistance at 11.27 before reaching the 100-day MA, currently at 12.10. On the weekly chart, no resistance is found until the $13 level is reached. Support will now be found at 10.22 and at 9.88. If there is follow through to the upside on Monday, above 10.49, the 10.22 level of support will gain strength. ELON had an inside week but was able to test the recent lows at 8.19 successfully when the stock dropped to 10.42 on Wednesday and then had two days staying above that low. In addition, the stock has been straddling the 50-week and 200-day MA for the past 2 weeks and was able to close above both of them on Friday, suggesting that some upward movement will now be tried by the traders. A rally above 9.02 would now be a short-term buy signal likely generating an immediate rally to 9.40. A break below 8.42 would likely generate a new short-term low with a drop down to 7.90. Based on the recent action, probabilities slightly favor the upside. STP has now negated 75% of the spike high rally from 8.90 to 10.83 seen 3 weeks ago, giving the stock a slightly bearish tone. By the same token, the stock has now been able to stay above the 200-day MA, currently at 9.10, that it broke above 3 weeks ago in spite of great weakness seen in the strong company in the industry being FSLR. The close on Friday was considered negative on both the daily and weekly closing chart and a drop down to the 200-day MA is probable to be seen this coming week. Nonetheless, the relative strength shown in the stock, versus the primary stock in the industry, suggests that the 9.10 level will hold and that a rally would likely occur thereafter. The longer term recent up-trend continues in effect. Any close above 9.81 would be a positive, and a close above 10.14 would suggest the up-trend has resumed. IR confirmed the sell signal given the previous week with a second close in a row below the previous weekly close support at 45.62. Nonetheless, the stock was able to close above both the 20-week and 50-day MA, currently at 44.40, thus leaving the door open for a rally if things in the indexes get better. Any close below 44.40 by at least 10 points would be a strong sign that the stock is heading down to the $40 level. A daily close above 45.33 would likely take the stock up to the 50-day MA, currently at 46.80. LVS had a fall this past week when it was announced the company had been subpoenaed by the SEC. At the time of the announcement it was also said that the company was being investigated by the Justice Department for shady dealings. The stock dropped over $3 in price on that announcement alone, and in the process convincingly broke below the 100-day MA, currently at 46.00. The stock was able to stay above the 200-week MA the stock has been testing repeatedly for the past 3 months, but just barely. Nonetheless, on the daily chart, the stock now shows a bearish inverted flag formation with the flagpole being the drop from 46.98 to 42.81 and the flag being the recent trading range up to 44.60. A break below 42.81 would give an objective of 40.43. Support on the weekly chart is found at 41.70 but with the recent fundamental news, its strength has been lowered from decent to minor to decent. A break above 44.60 would be considered a positive right now.
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1) ELON - Averaged long at 8.71 (2 mentions). No stop loss at present. Stock closed on friday at 8.62.
2) DCTH - Averaged long at 7.50 (2 mentions). No stop loss at present. Stock closed on Friday at 6.54.
3) FCEL - Purchased at 1.77. Averaged long at 1.50 (2 mentions). Stop loss now at 1.45. Stock closed on Friday at 1.70.
4) SVNT - Purchased at 9.51. Averaged long at 9.505 (2 mentions. Stop loss at 8.96. Stock closed on Friday at 9.43.
5) STP - Purchased at 10.03. Stop loss lowered to 8.95. Stock closed on Friday at 9.43.
6) SNDA - Shorted at 44.74. Covered shorts at 44.50. Profit on the trade of $24 per 100 shares minus commissions.
7) IR - Shorted at 44.53 and 45.23. Averaged short at 44.88 (2 mentions). Stop loss 45.79. Stock closed on Friday at 44.87.
8) LVS - Shorted at 43.45. Stop loss at 44.70. Stock closed on Friday at 43.65.
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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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