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Issue #218 
March 20, 2011 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Confusion Reigns! Volatile Week Expected.
DOW Friday closing price - 111858
The DOW broke convincingly below the strong psychological support level at 12,000 on Monday based on the unexpected news of the quake and tsunami that hit Japan. Many big Japanese companies will be severely affected by the disaster causing profits to decrease substantially this year, Japan's GDP to come down, and ripples to appear in the world economy.
With the news, the DOW took a big tumble as the news hit, breaking convincingly below the 50-day MA that had held strongly since August of last year as well as piercing temporarily the 100-day MA. Nonetheless, the index was able to recover some of its losses late in the week and close slightly above the upper half of the week's trading range, leaving questions as to what will happen this coming week.
On a weekly closing basis, resistance is minor at 12169 and decent at 12391. On a daily closing basis, resistance is minor at 111985 and very minor at 12044. Above that level, there is minor resistance at 12214, decent at 12258, minor at 12273 and decent to strong at minor at 12391. On a weekly closing basis, support is very minor at 11823 and at 11743. On a daily closing basis, support is minor to decent at 11613, minor at 11637 and 11731,
The DOW has now seen a correction of 846 points from the 12391 high seen the 18th of February to the low seen last Wednesday at 11555, and that fits in well with the "general" amount of correction seen in the first quarter in the last 10 years. Based on the 332 points rally seen in the last 2 days of the week, the possibilities that the low of the correction has been seen are good. Nonetheless, the market is presently moving off of fundamental news and not technicals and with the news still in flux and generally negative, it is difficult for the traders to have much confidence that a low has been found. The DOW was able to close in the upper half of the week's trading range but not by much and therefore it is difficult to say that the week's low is a spike low.
There are two chart keys for next week, starting with the 50 60-minute MA which was reached on Friday with the rally up to 11927. That line was tested successfully repeatedly on Friday and in the end the DOW backed off to close in the middle of the day's trading range, leaving the door open for either a failure or a rally. If a rally does occur and the 50 60-minute MA, currently at 11875 gets broken, and then confirmed with a rally above 11927, the index will likely rally up to the 50-day MA, currently at 12040. From a technical perspective, the index should have strong problems getting above that line.
To the downside, Friday's low at 11777 as well as the 20 60-minute MA, currently at 11764, will be the keys to what the index is to do on Monday, and likely for the rest of the week. A break below 11764 will likely cause the DOW to drop down to at least the 11696 level, but most likely down to 11573 where the traders will see if the previous low holds up or not. If not, drops down to the 200-day MA, currently at 11060, would likely be seen. Especially since below last week's low at 11555, there is no support of consequence until the low 11000's are reached.
The decision will likely be based on the news that comes out over the weekend regarding Japan's nuclear reactor status, the price of oil, or the status of the conflict in Libya and Bahrain. As such, as of this writing, there is little to go on to give you a decent probability number in either direction. One thing that is pretty certain, is that there is likely more room to the downside than to the upside, as the 12,000 level in the DOW is now going to be decent resistance no matter what happens.
NASDAQ Friday closing price - 2643
The NASDAQ, unlike the DOW, gave a strong sell signal on the weekly chart when the index closed below a decent weekly close support level at 2686 as well as below the 100-day MA. In addition, the index also closed in the lower half of the week's trading range, suggesting that further downside, below last week's low at 2603, will be seen this coming week.
The NASDAQ was definitely the worst performer of the indexes this past week, and having been the leader to the upside for most of the last 2 years, suggests that the buying interest in the index stocks has deteriorated sufficiently to believe that further downside is to come over the next few weeks.
On a weekly closing basis, resistance is minor at 2686 and decent at 2755. Above that level, very minor resistance is found at 2784 and strong resistance at 2833. On a daily closing basis, resistance is minor to perhaps decent between 2665 and 2671, minor at 2715, and decent between 2745 and 2755. Above that level, there is decent resistance at 2798 and strong at 2833. On a weekly closing basis, support is very minor at 2562 and then nothing until decent to strong resistance is found between 2518 and 2530. On a daily closing basis, support is now decent at 2616 and then nothing until minor to decent support is found at 24.98. Below that level, there is decent to strong support at 2469.
The NASDAQ broke below the 100-day MA, currently at 2665, on Tuesday and unlike the other indexes, failed to rally above the line the rest of the week, even on an intra-week basis. As such, the index is definitely showing signs of weakness, up and beyond what is being seen in the other indexes. With several of the most sought after and purchasable stocks during the past 2 years (AAPL, GOOG, NFLX, PCLN, and FSLR) the failure to rally above the line has to be considered a strong chart negative.
The NASDAQ shows very little support underneath until the 2500 level is reached and if the week's low at the psychological support at 2600 (got down to 2603) is broken this coming week, a strong and fast drop of 100 points would likely occur.
The key this coming week is the 100-day MA, currently at 2665 as well as a previous minor daily closing high at 2671. Any close above that level will likely stimulate the index to rally up to the 50-day MA, currently at 2745, where in conjunction with a previous high daily close of some consequence at 2755 would be the objective.
To the downside, the NASDAQ has now closed previously on 2 occasions at 2617 and 2616, and therefore a daily close below that level, in conjunction with an intra-day drop below 2600, would be a signal to the traders that the index is heading down to the 2500 level.
In the case of the NASDAQ, the probability number for the downside is greater than in the DOW. As such, it can be said that the indexes are somewhat in conflict with each other. By the same token, the NASDAQ is where the speculative buying has normally gone to, whereas the DOW is where "safe" money has flowed to, as such, the fact the NASDAQ is looking weaker suggests that the traders are leaning more toward further downside than upside in the index market.
On a daily closing basis, the 2671 level on the upside and the 2616 level on the downside is where the action will be indicative. A close above or below either of those levels, should stimulate further movement in that direction. With the close at 2643, it is evident that the traders did not lean in any particular direction on Friday, waiting to see what happens fundamentally over the weekend.
SPX Friday closing price - 1279
The SPX, like the DOW, was able to bounce up from the 100-day MA, currently at 1261, increasing the possibility that the index has found a bottom to the correction and will be moving higher at the beginning of the week. In addition, the index was also able to hold above the 20-week MA, currently at 1271, as well as close above a minor weekly close support at 1276. All of these charts events suggest that the worst to the downside could be over.
The SPX does not show any previous support at the levels it went down to this past week, other than the 100-day and 20-week MA's. As such, any further weakness and break of those lines will likely thrust the index down to the next level of decent to strong support at 1200.
On a weekly closing basis, resistance is minor at 1292, very minor at 1321 and decent at 1343. On a daily closing basis, resistance is minor at 1295, decent between 1299 and 1304, decent to strong between 1321 and 1330, and strong 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 minor at 1276, very minor at 1269, and minor to decent at 1256. Below that, there is minor support at 1235, very minor at 1223 and decent to perhaps strong between 1178 and 1184.
The SPX, like the DOW, held below the 50 60-minute MA all day Friday with the rally up to 1289. As such, that line, currently at 1284, will also be a determining factor on Monday, as far as the direction is after the weekend. A break above 1284, and more importantly above 1289, will likely thrust the index up to the 50-day MA, currently at 1304, where there is additional previous daily close resistance of some consequence.
To the downside, the low close seen on Thursday at 1256 is very important as a close below that level will thrust the index down to the 1225 level and probably down to the strong psychological support at 1200. On a shorter term basis, the SPX did close near the lows of the day on Friday and if Friday's low at 1276 is broken and then confirmed by also breaking the 20 60-minute MA, currently at 1272, selling pressure will increase, likely thrusting the index down to the week's low at 1249. If that is broken, 1225 would be the first downside objective.
Like the DOW, the SPX did close in the upper half of the week's trading range suggesting the probabilities favor further upside this coming week. Nonetheless, it is evident that Friday's trading range between 1289 and 1276 will be a possible determinant to what direction the index takes this week, and all based on how the recent fundamentals events turn out this weekend.
The indexes did break decently important support levels this past week due to the unexpected catastrophe in Japan, thus tilting the charts to the downside. Nonetheless, they were able to recover sufficiently to signal that the break was more fundamental than technical in nature and if those events take a turn for the better that the indexes could recover somewhat from the break.
The indexes are giving some mixed signals with the NASDAQ, the favorite index during the past 2 years, failing to rally enough to discredit the bearish signals given at the beginning of the week, whereas the other indexes did close out the week with enough of a rally to put the bearish signal in question.
This coming week will likely be mostly dependent on oil prices, recovery in Japan, and resolution of the problems in the Middle East. The week does not have a lot of important economic reports, with the most important coming in Durable Goods, which comes out Thursday. Yet the report is only a "B" kind of report and therefore not likely to have much of an effect anyhow.
As I write this, Libya is being bombed by NATO forces led by missiles sent by the US. As such, this is certainly going to be an event that will likely affect the market negatively on Monday.
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Stock Analysis/Evaluation
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CHART Outlooks
With much confusion being present in the indexes and direction not being clearly defined, the mentions this week will be tailored to the chart of the stocks themselves, rather than any effect the indexes may have on them.
The 2 sell mentions are in stocks that show strong reasons for thinking they are going lower, with one of the mentions being in a stock that has not shown much of a tie-in to the indexes at all. It is a stock that evidently moves on its own fundamentals and charts.
The 2 buy mentions, though, do have a clear tie-in to oil prices as oil is not likely to drop and does have high probabilities of going higher, no matter what the indexes do.
All 4 charts have "clearly" defined levels of support/resistance, high probability ratios, and excellent objectives. All mentions are rated highly.
PURCHASES
VLO - Friday closing price - 27.34
VLO is an oil refinery that took a major tumble in price from Nov07 to Mch08 from a high of 78.66 to a low of 13.94. The stock then got into a long base building process between a low of 15.29 and a high of 21.49 that took 22 months to construct before breaking out in December of last year. In Jan09, the stock had established a post-collapse high of 26.20 which was not broken until the last week in January of this year. Nonetheless, that high was broken 7 weeks ago and the stock is now seeing increased buying that suggests the stock is now into a strong up-trend. Since much of this has been caused by the increase of oil prices, and that is supposed to continue, the probabilities are high the stock will continue to move higher.
VLO has always been one of the giants in the oil refinery industry and it was surprising to see the company go down to such lows in price. Nonetheless, with the strong 2-year base building process having been accomplished and oil prices on the rise, the possibilities of the stock getting back to at least the $40 level are real.
On a weekly closing basis, resistance is minor to perhaps decent at 29.72 and then nothing until minor resistance is found at 32.95. Above that level, there is minor resistance at 35.85 and minor to decent at 38.88. On a daily closing basis, resistance is minor to decent between 28.56 and 28.98 and decent at 30.29. On a weekly closing basis, support is minor 24.59 and again at 24.13. On a daily closing basis, support is minor between 26.80 and 26.98 and decent at 26.32.
VLO for the last 4 weeks has gotten into a sideways trading range between 26.50 and 29.00. It is probable that this sideways trading range is simply a consolidation phase from the rally from 15.55 to 30.42 where the stock is also getting rid of the overbought condition the rally generated. The stock did have a rally at the beginning of the week that tested the 30.42 highs and it is likely the stock will have a drop this coming week to test the recent 25.60 lows. It is not likely that at this time either of the high or low levels seen recently will be broken. Nonetheless, the trend is still to the upside and after this consolidation phase is over, the probabilities favor resumption of the up-trend.
As far as resistance is concerned, VLO does show resistance on the daily closing chart at 28.98 and at 30.29, which also suggests the psychological resistance at $30 is in effect. Nonetheless, the weekly chart shows no previous resistance of consequence at that level. The next resistance level found on the weekly chart is the 200-week MA, which is currently up at 33.00. Above that level there is some minor to decent resistance on the weekly closing chart at 35.87. Nonetheless, since the stock dropped so precipitously from 2007 to 2009, no resistance levels of consequence were built, giving the stock plenty of room to the upside to rally before any resistance of consequence can be expected.
Due to the fact that the stock failed to make a new high last week in spite of the strong rally on Monday and then turned around to close near the lows of the week, the probabilities are high that there will be a fair amount of selling at the beginning of the week, taking the stock below last week's low at 27.11. Support will be found between 26.30 and the 50-day MA, currently at 26.80. Strong support is found at the recent low at 25.60. Dips down to that level of support should be aggressively bought due to the probability number being high and the risk/reward ratio excellent.
Purchases of VLO between 26.31 and 26.81 and using a stop loss at 25.50 and having a minimum objective of 33.00, will offer a 6-1 or better risk/reward ratio.
My rating on the trade is a 4.25 (on a scale of 1-5 with 5 being the strongest).
BHI Friday Closing Price - 68.50
BHI has been on a strong weekly uptrend since August with a rally that started at 36.76 and topped out at 71.90. During the past 7 weeks the stock has been consolidating its gains but within a bullish flag formation that has an upside objective of at least $80.
BHI, being a company that produces equipment for oil exploration and production, is closely tied in to the price of oil, and with oil prices seemingly in a bull run to the upside that has yet to reach its objective, it is likely that further upside will continue to be seen.
On a weekly closing basis, resistance is minor to decent at 71.50, very minor at 78.25, and minor to decent again at 80.47. Strong resistance is found at 88.60. On a daily closing basis, very minor resistance is found at 69.52, minor at 70.42, and decent between 71.12 and 71.50. On a weekly closing basis, minor support is found at 67.13, minor to decent support at 63.96, and decent to perhaps strong support is found between 62.38 and 62.74. On a daily closing basis, minor support is found at 67.45, and decent support is found between 66.67 and 66.75.
BHI is showing a very bullish flag formation on the weekly chart with the flagpole being the rally from 54.33 to the 71.90 high. That rally also began when the stock broke above the 200-week MA, giving the rally even that more strength and believability. The flag formation has been the trading range for the last 7 weeks between 71.90 and 65.10. The objective of flag, if the top of the flag at 71.90 is broken, is a rally up 82.70.
BHI has traded totally sideways during the past 7 weeks, likely consolidating its gains after the stock rallied $35 during the previous 6 months. The stock did show a spike low 2 weeks ago when it dropped down to 65.10 and with the fact the stock closed in the lower half of last week's trading range on Friday, it is highly likely that a drop to test the recent lows will be seen this coming week. Objective of the drop is 65.81 to 66.00.
With oil prices trading around $100 and not likely to go down much from there, the probabilities of the stock holding above the recent low at 65.10, are very high. The risk/reward ratio on this trade, as well as the probability number, is excellent based on this scenario.
Purchases of BHI between 65.81 and 66.01 and using a stop loss at 65.00 and having an objective ot 82.70 will offer a very high 16-1 risk/reward ratio.
My rating on the trade is 4 (on a scale of 1-5 with 5 being the highest).
SALES
MCD Friday Closing Price - 72.99
MCD has been on a major uptrend since 2003 with a rally from 12.12 up to the recent all-time high made in November of last year at 80.94. The stock from Dec07 to Mch10 consolidated its gains and did see a correction and a trading range between 66.24 and 45.79 during that period of time. Once again, the stock seems to have found a top and is likely to once again be in a new consolidation/correction phase that could last for some time.
MCD did not participate at all in the first quarter rally seen in the indexes and has been building a short-term bearish inverted flag formation that might have been broken this past week, suggesting that further downside will be seen in the next few weeks or months.
On a weekly closing basis, resistance is minor at 75.01, decent to strong at 76.73, and strong to perhaps major at 79.47. On a daily closing basis, resistance is minor 75.48, decent at 76.24 and decent to strong at 76.73. On a weekly closing basis, support is minor at 69.88 and decent to strong at 66.14. On a daily closing basis, support is minor to decent at 76.27, minor at 69.38 and decent to strong at 65.87.
MCD has built a bearish inverted flag formation on the daily and weekly chart with the flagpole being the drop from 80.94 down to 72.12 and the flag being the 10 weeks between 72.12 and 77.25. The objective of the flag is a drop down to at least 68.43. The bottom of the flag seems to have been broken this past week when the stock closed below the previous weekly low close at 73.28. In addition, the stock broke the 200-day, currently at 74.30 as well as the 50 week MA, currently at 74.00, suggesting that a drop down to the Jun10 low at 65.31, as well as the 100-week MA, currently at 66.55, will be the downside objective.
MCD closed below the 200-day MA on Wednesday and followed up confirming the break with 2 additional closes in a row below the line. In addition, the stock closed on Friday below the 50-week MA as well as giving a clear sell signal by closing on Friday below the previous low weekly close at 73.28.
MCD does show some intra-week support at 72.14 from the low seen on January 14th, as well as a daily closing support still inviolate at 72.67. Nonetheless, the other signals given this past week suggest those supports will not hold up. By the same token, it is possible that because the stock has not yet broken those supports that an attempt to retest the breakdown points seen this past week at 74.00 to 74.30 will be seen.
Below 72.14 there is no support until the $70 dollar demilitarized zone between 69.70 and 70.30 is reached. Nonetheless, should that level get broken drops down to the 100-week MA, currently at 66.55 will likely ensue. With the fact that in 2008 the stock did drop just over $21 in value during that correction, a drop down to the $66 level, from the high at 80.94 ($15), seems to pale in comparison.
Sales of MCD between 73.75 and 74.40 and using a stop loss at 75.95 and having an objective of 66.60, will offer a 4-1 risk/reward ratio.
My rating on the trade is a 3.5 (on a scale of 1-5 with 5 being the highest).
JPM Friday closing price - 45.74
JPM has had a long history, dating as far back as 1998, of trading between $50 and $40, based on a weekly close. The stock has been as high as 67.17 and as low as 14.96 during the past 13 years, but at least 40-50% of the time has traded between $40 and $50. More importantly, though, since January 2007, the highest weekly close has been 48.66.
Four weeks ago, JPM generated a weekly close at 48.00 (48.35 intra-week) but since then has been unable to even rally back intra-week to the $48 level. With the indexes likely to be in the middle of a corrective phase and the stock showing an inability to rally above what has been considered a major resistance level for the past 4 years, the probabilities of the stock heading back to the $40 level have increased.
On a weekly closing basis, there is decent to strong resistance between 48.00 and 48.66. On a daily closing basis, resistance is decent between 46.55 and 46.69 and strong between 47.81 and 48.00. On a weekly closing basis, support is minor at 44.44 and minor again at 40.96. Below that level, support is decent between 39.67 and 40.28 ($40 demilitarized zone). Strong support is found between 35.83 and 37.49. On a daily closing basis, support decent between 45.19 and 45.21, minor at 44.54, at 43.71 and at 43.40 and then nothing of consequence until 40.27 is reached.
JPM, same as the indexes, has been on an uptrend since December. Nonetheless, 4 weeks ago when the stock got up to 48.35, the selling increased vividly causing the stock to falter in its uptrend and start to give some failure signals. The stock gapped down between 47.55 and 47.27 on February 22nd and was not able to find any support of consequence until the $45 level was reached. Since then, the stock has re-tested the gap area twice with rallies up to 47.18 and 47.10 but has failed to close the gap, strongly suggesting that further downside will occur unless the indexes stage a strong rally.
JPM did break below the 50-day MA (currently at 45.40) this past week when the indexes got slammed after the catastrophe in Japan happened. Nonetheless, after getting down to 43.40 and the 20-week MA, the stock was able to find strong buying, in conjunction with the buying seen in the indexes, and rally back above the 50-day MA to close near the highs of the week. The probabilities favor further upside this coming week with the possibility of yet another attempt to close the gap between 47.27 and 47.55 or at least a retest of the recent highs at 47.18 and 47.10.
Based on the status of the indexes at this time, as well as the uncertainty regarding the health of the market with all the fundamental problems being seen, the likelihood of JPM being successful in closing the gap is low. In addition, the stock left an open gap on Friday between 44.75 and 44.61, which was not based on fundamental news, and therefore highly likely to be closed. Closure of that gap will put the stock once again below the 50-day MA, and such a scenario would likely disappoint the bulls greatly.
Sales of JPM between 46.78 and 46.86 and using a stop loss at 48.12 and having an objective of 40.00 will offer at least a 3.5-1 risk/reward ratio.
My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the highest).
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Updates
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| Updates on Held Stocks |
Closed Trades, Open Positions and Stop Loss Changes |
| DCTH continued its slow upward climb with yet another weekly green close, the third in a row. The stock did manage to generate a second buy signal by closing above a decent daily close resistance at 6.98 (closed at 7.03), but it was not by a sufficient enough margin to give the bulls confidence that it will continue higher. The stock did close at the 100-week MA, currently at 7.05, but not above it, which also leaves questions unanswered for next week. The highest point in the last 3 weeks of trading has been 7.05 and therefore a break above that level on Monday will likely generate enough buying to take the stock up to at least the 7.93 level, and perhaps even up to 8.11 to start testing the gap that was left right after the announcement of the FDA delay. To the downside, and on a daily closing basis, there is very minor support at 6.88 and just a bit stronger at 6.61. By the same token, if the stock rallies and closes higher on Monday, the previous high daily close at 6.98 should become support. FCEL did generate a buy signal on the daily closing chart when it was able to close above 2.00 on Tuesday (closed at 2.08). Nonetheless, the stock was unable to show any follow through to that close and fell to close once again below 2.00 on Friday. As such, no buy signal was given on the weekly closing chart and if the stock is able to close in the red on Monday, will give a failure to follow through signal on the daily closing chart as well. Nonetheless, the close at 1.97 was not sufficiently enough below 2.00 to say that a failure signal was given, so a green close on Monday, especially above 2.00, will likely bring in new buying. Support intra-week will be found at Tuesday's low of 1.82 (week's low). Resistance is found at the week's high at 2.17. It is evident that whichever high or low for last week gets broken, will generate further action in that direction. SVNT gave a sell signal on the weekly closing chart, closing below the lowest weekly closing low at 9.38 since June 2009 (closed on Friday at 9.28). The sell signal has come at a time when the stock had shown flashes of support 3 weeks ago, after being able to close above the strong psychological resistance level at $10 (closed at 10.37 the last week of February). Nonetheless, there has been no follow through to that mini breakout and the stock now shows definite failure signals with 11 days in a row of red closes as well as a break of all previous supports except one, the low daily close at 9.15. It is evident the stock needs some good news to turn this around, but at this time no good news seems to be "around the corner. Probabilities now favor the downside. This is a pivotal week for the stock because if the stock closes below 9.28 again next Friday, it will confirm the break of support and drops down to the $7 level will become possible. There is no resistance close by on the daily chart, as such, if the stock starts to rally, a move back to $10 will likely be seen. Nonetheless, for the last 10 days the stock has been unable to get above the 20 60-minute MA though it has tested that line on 7 occasions successfully. The line is presently at 9.43 as well as the most recent high on the intra-day chart. If the stock is able to get above 9.43, it is likely that the low has been found and a rally will occur. By the same token, if the stock continues lower and the break of weekly close support is confirmed next week with another close in the red, or the 9.06 intra-week low is broken, the stock could be heading down to the $7 level as there is no support on the chart til that price is reached. ELON continued to move lower on the weekly closing chart but was able to close above an important weekly closing support at 7.87, though the stock got all the way down to 7.67 intra-week. The stock did close near the highs of the week and if the stock is able to get above last week's high at 8.34, this past week's low will take the look of a spike bottom. Having closed at 8.25 on Friday, the probabilities of getting above last week high are high. On the daily closing chart, the stock shows a successful test of the psychological support at 8.00 with a close at 8.09 and 3 subsequent higher closes. Nonetheless, until the stock is able to close above the 200-day MA, currently at 8.60, the bulls will not be able to say the stock has stopped moving downwards. Nonetheless, a green close next Friday will keep the 7-month weekly uptrend intact as well as the rounded bottom that is being built since 2008. A daily close below 8.09 would be negative at this time. STP was able to generate a green close on Friday making the previous week's close at 8.04 into a successful retest of the very important weekly close support at 7.32. With the worries that were generated with the Nuclear Reactor breakdown in Japan, solar stocks may start receiving a bit more interest and that was evident by the action seen this past week. The stock rallied over $1 from the lows but ran into a brick wall at the 200-day MA, currently at 9.10 and fell back. The stock does show good support at 8.30 that should not be broken if the stock is heading higher. Resistance will be strong at 9.10 on the daily closing chart and at 9.50 on the weekly closing chart. Any close above 9.10 or below 8.30 will likely generate further movement in that direction. Probabilities slightly favor the upside. IR continues to generate a short-term rally making yet another green weekly close. Nonetheless, the decent weekly close resistance at 47.09 was not broken in spite of the fact the stock traded above that level intraweek. The stock may have given a small short-term buy signal on Friday closing above a decent daily close resistance at 46.53. Nonetheless, the close above was only by 8 points and that is not by a sufficiently wide number to insure that a break occurred. Resistance on the daily closing chart is decent between 47.10 and 47.49 and again at 47.66. It is unlikely the stock will close above that level unless the indexes generate a new uptrend. By the same token, any red close below 46.53 will be a likely signal that the upside rally is over. The 100-day MA, currently at 44.85, is now considered important support. LVS continued to break down confirming a break of the 200-day MA, currently at 38.00, with 3 closes in a row below the line. Nonetheless, the stock was able to hold itself above the 100-week MA, currently at 36.35 as well as above a decent previous weekly closing low support at 36.04. The daily chart suggests there is a good possibility of the stock getting down intra-week to 30.56, but the weekly closing chart seems to suggest the stock will hold itself above the 36.04-36.35 level by the close next Friday. As such, if the stock does show weakness intra-day and drops below $31, taking profits should be considered. Stop loss orders should now be placed at 38.78. CIT confirmed the previous break of support at 42.69 with 3 daily closes in a row below that line. Nonetheless, the stock was able to generate a rally after getting close to the 200-day MA, currently at 41.10 (got down to 41.35) and rally back up to the 42.54 close on Friday. The chart continues to look bearish but on a daily closing basis the trading range has shrunk to 42.69 on the upside and 41.40 on the downside. A close above or below either of these 2 levels will likely generate further movement in that direction. For those following the stock: AMZN confirmed the sell signal given on the weekly closing chart with a second close in a row below 171.14. The break of support does give an objective on the weekly chart of $150. By the same token, a retest of the break point at 171.14 is possible to be seen. In addition, the stock does show minor to decent previous weekly close resistance at 170.77. On an intra-week basis, the stock is likely to be in a trading range between $150 and $175 for the next 4-8 weeks. On a shorter term daily closing basis, support is found between 157.78 and 160.73. With Thursday's close at 160.94 and Friday's green close, it is possible to think that the stock may have found temporary support and could generate a bounce next week. The bounce could be as high as 168.14 or as low as 165.19. Should be stock get above 168.14, rallies above $170 and even up to the 50-day MA, currently at 175.40 could be seen. The stock finds itself in an oversold condition and the probabilities seem to favor a move to the upside first.
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1) ELON - Averaged long at 8.71 (2 mentions). No stop loss at present. Stock closed on friday at 8.25.
2) DCTH - Averaged long at 7.50 (2 mentions). No stop loss at present. Stock closed on Friday at 7.03.
3) FCEL - Purchased at 2.01 and 2.04. Averaged long at 1.7625 (4 mentions). Stop loss now at 1.63. Stock closed on Friday at 1.97.
4) SVNT - Averaged long at 9.505 (2 mentions). Stop loss at 8.96. Stock closed on Friday at 9.28.
5) STP - Purchased at 8.66. Averaged long at 9.345. No stop loss at present.Stock closed on Friday at 8.54.
6) CIT - Shorted at 42.40. Averaged short at 43.363 (3 mentions). Stop loss at 44.42. Stock closed on Friday at 42.54.
7) IR - Averaged short at 44.88 (2 mentions). No stop loss at present. Stock closed on Friday at 46.61.
8) LVS - Shorted at 38.00. Averaged short at 40.725. Stop loss now at 38.78. Stock closed on Friday at 36.34.
9) AMZN - Shorted at 166.48. Liquidated at 166.96. Loss on the trade of $48 per 100 shares plus commissions.
10) AMZN - Shorted at 166.10. Liquidated at 161.45. Profit on the trade of $465 per 100 shares minus commissions.
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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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