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Issue #219 
March 27, 2011 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Indexes at Resistance Levels of Consequence. Further Upside Requires Fundamental Help!
DOW Friday closing price - 12220
The DOW had a strong week in which traders ignored all the negative news that had been causing it to break down previously. The index started to recover when the Asian markets bounced from the strong sell off seen the previous week due to the Japan catastrophe. The bulls took advantage of the bounce by saying that the "expected" correction is over and that the bull-trend is now ready to continue. With little previous resistance of consequence on the charts, until Fridays levels were reached, the bears stepped aside allowing the index to rally over 700 points in a little over a week.
On Friday, the DOW reached a level of decent resistance between 12232 and 12283 (got up to 12259) but the bulls were unable to get above it, settling down to close slightly above the 12214 daily close resistance but below the 12258 area where the resistance is stronger.
On a weekly closing basis, resistance is decent at 12391. On a daily closing basis, resistance is decent at 12258, minor at 12273 and decent to strong at 12391. On a weekly closing basis, support is minor to decent at 11858, very minor at 11823 and then nothing until 11100. On a daily closing basis, support is minor at 12090 and minor to decent at 12058. Below that level, there is minor support at 11823 and decent to strong support at 11613.
The news this past week continued to be generally negative with oil prices getting back above $105 a barrel, Durable Goods coming in lower than anticipated, Japan's nuclear reactor continuing to spew radiation, and the problems in the Middle East not only continuing but in many cases getting worse. Nonetheless, the traders ignored all the fundamentals and pushed the DOW up over 700 points attempting to re-generate the up-trend by getting momentum going back to the upside.
Up until Friday, no resistance levels of previous highs had been reached, allowing the bulls to move the index up without too much selling being seen. Nonetheless, on Friday the DOW reached a level of previous high resistance between 12232 and 12283 that had stopped the index for a period of 2 weeks starting the last week in February and ending the second week of March. That level of resistance was prior to any of the recent problems (oil prices and Japan's catastrophe) and should be strong enough to stop any further upside from occurring, at least until more positive news comes out.
This coming week, though, is full of economic reports which will be closely monitored by the traders. Starting on Monday, Personal Income and Spending comes out, followed on Tuesday with the 20-city Case-Schiller report as well as Consumer Confidence numbers. On Wednesday the ADP Employment Change comes out followed on Thursday with Initial Claims, Factory Orders, and Chicago PMI. The big day will be Friday when the Jobs report comes out as well the ever important ISM Index. In addition, Construction Spending and Auto sales will be seen as well.
The slew of economic reports due out this week are likely to act as a strong catalyst to the DOW causing this recent 700 point move up to be seen as the retest of the 3-year highs before getting into a downtrend, or the beginning of the next leg up in the uptrend that has been in existence since March 2009.
The probabilities favor the downside as the problems being seen in the Middle East are very likely to cause higher oil prices in the future putting a strong negative to the bottom line of most companies. In addition, Japan's catastrophe is likely to have the same negative impact for years to come. As such, it is difficult to imagine an economic situation that would be better than what was being seen prior to the problems where even then, the indexes were showing reluctance to move higher.
On a chart basis, there are 2 levels that should be closely watched this coming week. On a daily closing basis, there is decent resistance at 12258 and strong resistance at 12391. With the DOW having closed on Friday at 12220, it is likely the 12258 level will be in play from the get-go this coming week. A red close on Monday would bring back renewed selling pressure, likely taking the index back down to the 12,000 level and the demilitarized zone awaiting further economic news throughout the week. This is the most likely scenario.
Minor to decent support will be found at 12058. Nonetheless, it is likely to be a pivotal area for the DOW as a close below that level, especially a close below 11970, would be considered a failure to follow through as well as a new sell signal. If that happens, the onus will be back on the shoulders of the bulls and they would need the rest of the reports throughout the week to be much better than expected to be able to annul that negative.
The probability of the economic reports being better than expected is low as most of the recent reports have not fared well. By the same token, with the momentum to the upside and the strong reports not due out until Thursday, the probabilities of the index trading between 11970 and 12250 for the first 3 days of the week are high. Though the rally this past week was impressive, the probabilities favor at least a pause, if not a failure, this coming week.
NASDAQ Friday closing price - 2743
The NASDAQ accomplished the most of all the indexes this week, negating the confirmed break of the 100-day MA as well as closing just above the 50-day MA. In addition, the runaway gap the index was showing between 2721 and 2737 was closed, leaving the door open for further rally to the upside to close the breakaway gap between 2808 and 2823.
Nonetheless, on a negative note the NASDAQ was unable to even get up close to the early March highs, or even get above the highs made in the middle of January, whereas the DOWand SPX were able to accomplish the latter. As such, the accomplishments of the index this week cannot be construed as stating the index is heading higher from here.
On a weekly closing basis, resistance is minor to decent at 2755, very minor at 2784 and strong at 2833. On a daily closing basis, resistance is minor at 2755, minor to decent at 2765, decent to strong at 2798 and strong at 2833. On a weekly closing basis, support is minor to decent at 2686 and decent 2643. Below that there is now support until the low 2500's are reached. On a daily closing basis, support is minor at 2722, minor to decent at 2686 and decent at 2616.
The NASDAQ did negate the previous week's break of support and the sell signal given, but did not reverse enough to generate new technical buying, thus leaving the index somewhat in limbo awaiting the economic news due out this week. With the index being the leader for the last 2 years it was also interesting to note that even though it was barely able to close above the 50-day MA, whereas the other indexes did close above the line convincingly. This action continues to cause strong doubts as to the validity of this past week's rally.
The NASDAQ needs to become the leader to the upside once again in order for the bulls to have confidence that further upside is to be seen and that means the index needs to first close above 2755 (high daily close seen in January) and then close above 2798 (high daily close seen the first week of March. Having closed at 2743 on Friday, any daily red close, prior to a close above 2755, would be considered a negative.
To the downside, the NASDAQ shows important support at 2686 (previous daily close of consequence) and at 2682 (100-day MA) as a break of that level on a daily closing basis will likely bring in the strong selling once again. As such, the index is likely to trade for the first few days of this coming week between 2755 and 2686, based on a daily closing basis. Trading in that range will not be highly indicative but a close above or below those 2 levels could push the indexes further in that direction.
SPX Friday closing price - 1313
The SPX was the most supportive of all the indexes inasmuch as the index was able to hold the previous week above a minor weekly close support level at 1276 (closed at 1279) as well as generate a successful retest of the 20-week MA, currently also at 1276. With the index being the only one that did not generate any kind of a sell signal the previous week on the weekly chart, it has to be considered a bullish sign.
On a negative note, though, the SPX did not get up to the March highs, like the DOW did, and like the NASDAQ closed in the lower half of Friday's trading range, suggesting that on Monday the index will show some weakness.
On a weekly closing basis, resistance is decent to strong at 1343. On a daily closing basis, resistance is decent between 1323 and 1330 and strong at 1343. On a weekly closing basis, support is 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 at 12978/1300, minor to decent at1276, and decent to strong 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 generated and confirmed a successful retest of the 100-day MA, currently at 1256 with all the green closes this past week. In addition, the index closed convincingly above the 50-day MA, currently at 1304, and though a drop back down to that line is likely to be seen on Monday unless the index can close below that line and more importantly below 1297 the recent rally will continue to lean toward the bullish side. On a daily closing basis, the 1306 level will once again be considered decent support.
To the upside, the SPX shows decent resistance starting at 1324 and up to 1332 and not having been able to get even close to that area on Friday (high was 1319), the action has to be considered as lacking in strength. In addition, having closed in the lower half of the day's trading range on Friday the probabilities favor a drop back down to the 1300 area on Monday. If that occurs, some pessimism will start to filter in to the minds of the traders that would likely only be negated with positive economic news.
The indexes were strong this past week but did not accomplish anything of consequence to the upside. Getting back above the 50-day MA, as all indexes did this past week, does not necessarily mean the bull trend is back, but simply means the indexes are not yet ready to go substantially lower, with the key word being "yet". Such action could mean the indexes will trade sideways for a few weeks.
All the problems that caused the downfall of the indexes 2 weeks ago are still valid. Oil prices continue indicatively above $100 a barrel, Japan's nuclear reactor has not yet been deemed safe, the Middle East tensions not only have continued but in some cases have gotten worse, and economic reports also continue to show weakness, as the Durable Goods report on Thursday indicated. As such, the rally this past week cannot be fundamentally explained in a rational way.
It is evident that the bulls took advantage of some of the momentum caused to the upside by the bargain basement buying that occurred when the problems in Japan started to subside. Nonetheless, those problems will continue to be felt for months. As such, the bulls will be totally dependent this week on the slew of important economic reports due out this week, in order to keep the rally going forward. I don't believe those reports will be good enough to accomplish the objective of the bulls. Probabilities favor a downtrend beginning.
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Stock Analysis/Evaluation
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CHART Outlooks
This is going to be a pivotal week in the indexes. The short-term momentum is to the upside but in my opinion the fundamentals just don't support the rally and I believe this rally was just a retest of the highs before a downtrend begins. As such, all mentions this week will be sales.
Nonetheless, keep a close eye on the 2 buy mentions made last week in BHI and VLO as they are still viable should they get down to the desired entry points.
SALES
MCD Friday Closing Price - 75.25
MCD had 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 generated a high of 66.24 between Dec07 to Mch10 but then 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 even last week the rally seen in the stock did not match that of the indexes. With a possible downtrend beginning in the indexes and the stock likely in a corrective phase, lower numbers are expected.
On a weekly closing basis, resistance is minor at 76.14, decent to strong at 76.73, and strong to perhaps major at 79.47. On a daily closing basis, resistance is minor 75.38, decent at 76.24 and decent to strong at 76.73. On a weekly closing basis, support is decent between 72.99 and 73.38, minor at 69.88 and decent to strong at 66.14. On a daily closing basis, support is minor at 74.44 and decent between 72.67 and 73.28. Below that there is no support of consequence until 69.38 is reached.
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 stock the previous week had closed below the 200-day MA (currently at 74.50) as well as the 50 week MA (currently at 74.00) and seemed to be heading down to break the bottom of the flag at 72.12 (got down to 72.89), but the rally in the indexes as well as the oversold condition prevented the bears from being aggressive and the stock managed to rally and close above both the 200, 50 and 20 day MA's, as well as above the 50-week MA.
Such action would normally be considered a bullish sign but with the inverted flag formation still in place and strong resistance found between 76.45 and 77.25, as well as the fact there is a double top at 77.24/77.25, the probabilities of the MCD being able to get above that level are low.
MCD found itself in an oversold condition that with the rally in the indexes was not likely to allow the stock to go lower. Nonetheless, that oversold condition was relieved this past week with the rally and now the stock is reaching levels of resistance that will only be broken if the stocks comes up with some positive fundamental information as well as a strong further rally in the DOW. Even with a rally in the indexes the stock has shown in the past the ability to go "against" what the market does, which suggests that a sale at these levels could be a high probability trade.
Below 72.12 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 75.74 and 76.45 and using a stop loss at 77.35 and having an objective of 66.60, will offer a 4-1 risk/reward ratio.
My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the highest).
JPM Friday closing price - 45.86
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 possibly in a topping out formation 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's rally this past week was disappointing in the face of the strong rally seen in the indexes. The stock was unable to even get up to the $47 level (got up to 46.38) which should have happened after the stock successfully retested the gap left the previous week between 44.61 and 44.75 with a drop down to 44.77. The stock did close in the upper half of the week's trading range suggesting that further upside may be seen this week, perhaps with a rally up near $47 once again. By the same token, the stock did close near Friday's lows, also suggesting that Monday the stock will trade lower.
As it stands right now, the gap between 47.55 and 47.27 has now stood inviolate for 4 weeks and looming to be a major breakaway gap. As such, closure of the gap would only occur if the indexes head substantially higher and drag JPM along with them. The probabilities of that happening are low. As such, a stop loss at 47.54 can now be used with a certain amount of confidence.
To the downside, the previous week's low at 43.40 has to be considered support, especially since it is where the 20-week MA is currently at and where the 100-day MA will be this week. Nonetheless, if the indexes do head lower, as I expect them to, that level should break and there is no support of consequence underneath until the $40 level is reached.
Sales of JPM between 46.18 and 46.31 and using a stop loss at 47.54 and having an objective of 40.00 will offer at least a 5-1 risk/reward ratio.
My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the highest).
LVS Friday closing price - 42.56
LVS was able to shrug off much of the recent weakness associated with the SEC investigation when the stock was able to hold itself above the 200-day MA as well as receiving upgraded projections from BMO Capital of probable higher profits to come. In addition, the stock was also upgraded by UBS.
Nonetheless, the chart picture on LVS remains negative as the stock continues to trade "below" the previous support levels from which it broke down from (44.11-44.34) and if the indexes do start a downtrend, as I believe they will, the stock is not likely to go much higher than what was seen on Friday.
On a weekly closing basis, resistance is minor 42.60 (200-week MA), minor again at 45.35, and decent at 47.76. On a daily closing basis, resistance is minor between 44.10 and 44.34, minor to decent at 46.98, decent at 49.05 and decent to strong at 51.05. On a weekly closing basis, support is decent at 46.34 and again at 34.09. Below that level there is no support of consequence until the $20 level. On a daily closing basis, support is minor at 38.11 and minor to decent at 36.34.
LVS broke below the 200-week MA 3 weeks ago and confirmed the break with 2 subsequent weekly closes below the line. The stock had been trading above the line for the previous 5 months, so the break of the line was indicative. On Friday, though the stock was aggressively rallying, it received enough selling late in the day to come back to the line and close right on it, failing to show any ability to renew the previous uptrend. By the same token, the stock did close near the highs of the week, suggesting that further upside will be seen this coming week, at least on an intra-week basis.
Though previous lows are not generally strong resistance levels, the fact the stock had shown 3 previous important intra-week lows between 44.10 and 44.34, as well as having the 50-day MA currently at that level as well, suggests that selling will be seen there. The company continues to be under SEC and Justice Department scrutiny for improper bribes at its Macau location. Such scrutiny is not likely to be settled soon and therefore that negative will continue to hang over the stock for the next few months.
There is a minor intra-week high at 44.60 that will be used as a stop loss point. If broken, the stock is likely to rally up to the 100-day MA, currently at 46.10 where the stock can again be considered a sale with a 47.08 stop loss. To the downside, the 200-day MA, currently at 38.60, continues to be good support as well as the most recent weekly low close at 36.34 which is also at the 50-week MA. As such, the probabilities of the stock trading between $44/$46 and $36/$38 for the next few weeks, or longer, are high. Nonetheless, if the stock fails next week to close above the 200-week MA (closes in the red next week), the recent low at 36.34 could be at risk of being broken and if that happens, drops down to an important intra-week low at 30.56 would likely be seen.
Sales of LVS between 44.10 and 44.34 and using a stop loss at 44.70 and having a 38.60 objective offers an 8-1 risk/reward ratio.
My rating on the trade is a 3 (on a scale of 1-5 with 5 being the highest). The rating is a bit on the low side because there are good possibilities of the 44.70 stop loss being triggered and a rally up to 46.10 occurring.
TRW Friday closing price - 54.05
TRW made a new all-time high, above the previous high at 42.30 made in September of last year, generating a strong rally up to 63.26 seen in January. Nonetheless, much like the DOW, the stock has been declining in price over the last 9 weeks and having failed to rally this past week, even though the indexes did generate a strong rally, suggests the stock is heading lower for the short-term.
TRW is showing a bearish inverted flag formation on the daily chart as well as a confirmed break of the 100-day MA, both giving objectives down to the mid 45's where the 200-day MA is currently located. Having failed to rally this past week, the stock is likely to be the recipient of a strong amount of selling if the indexes start heading back down.
On a weekly closing basis, resistance is decent between 59.42 and 60.22 and strong at 61.05. On a daily closing basis, resistance is minor at 54.91, minor to decent resistance is found at 57.55, and decent to strong between $59 and $61. On a weekly closing basis, support is minor at 52.43 and at 47.91. Below that level there is no support until minor support is found at 41.65. On a daily closing basis, supports are all minor at 53.06, at 52.33 and at 51.67. Minor to decent support is found between 46.71 and 45.40.
When TRW first started trading back in Apr07, it showed a major high at 42.30 that stood up for over 3 years until October of last year. Upon the break of major long-term resistance the stock climbed aggressively up to 66.36 over a period of 16 weeks, where selling finally came in. If the indexes do get into a downtrend, the stock will likely head back down to test the breakout area at 42.30. Support will be found psychologically at $50, at the 200-day MA, currently at 45.40, and at the previous high of 42.30.
Resistance is now decent at the 100-day MA, currently at 54.90, as well as at the top of the inverted flag formation at 55.10. The stock did get up to the 54.90 level on Friday but reversed to close near the lows of the day, suggesting that further upside may not be seen.
Sales of TRW between 54.50 and 54.68 and using a stop loss at 55.35 and having an objective of 45.40 will offer an 11-1 risk/reward ratio.
My rating on the trade is a 4 (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 was able to generate a few positive things this past week starting with the confirmation of the previous week's break above the 100-week MA as well as generating a second buy signal by closing above the previous high daily close at 7.03. Very minor resistance is found at 7.25 and then nothing of consequence until 7.93 is reached (7.75 on a daily closing basis). On a daily closing basis, 6.81 should now be considered minor to decent support but somewhat important to the health of this recent rally. Further upside should be seen this week with 7.93 as the most likely objective. Nonetheless, it is possible that the stock will get up to as high as the 200-day MA, currently at 8.30. It is highly likely that if the stock does get moving higher, that at some point the gap area between 11.19 and 8.11 will be tested and therefore a rally up to 8.30 is a definite possibility if not probability. FCEL was able to continue its upward climb with yet another weekly green close and most importantly above the important 2.00 level on the daily closing chart. Nonetheless, the stock does show a couple of previous weekly low closes at 2.10 and 2.13 that the stock was unable to close above, leaving the door open for selling to come in. On a daily closing basis, the 2.08 level is starting to take on additional meaning as well as on the downside the 1.97 level as well. A close above or below either of those 2 levels will likely generate further movement of some consequence in that direction. On a longer term weekly closing basis, the 1.70 level is now strong support and the 2.30/2.40 level strong resistance. A weekly close above or below either of those levels will be highly indicative. Probabilities favor the upside as a strong support base seems to have been built. SVNT got a strong piece of news this past week when it was able to ink a 5-year contract with the Veterans Administration to supply its medicine for gout and weight gain loss. On that news the stock jumped up to negate all the recent weakness and close above the important psychological resistance level at $10. In addition, with the rally, the drop down to 9.25 became a successful retest of the lows, suggesting that the stock will now be moving higher. Nonetheless, the stock has still not accomplished giving a buy signal as it needs a daily and weekly close above 10.37 to do that (stock closed on Friday at 10.13). Nonetheless, the fundamental news seems to be positive enough to have shifted the probability number toward the upside, especially when considering that the stock was trading as high as $23 just 6 months ago and the only thing that has changed since then if the lack of funding needed. The 5-year contract with the VA will likely assuage some of those fears. A close above 10.37 will likely cause the stock to move up to the 50-day MA, currently at 12.75. ELON accomplished a lot this past week when the stock was able to close above the 200-week MA as well as above the 200-day and 100-day MA's convincingly as well as generate a buy signal when the stock closed above all the resistance levels built over the past 4 weeks. The stock does face resistance at the 9.40 level where the 50-week and 100-week MA's as well as the 50-day MA are currently at. In addition, the stock does show decent weekly close resistance at 9.55, making this area difficult to get above. Nonetheless, it is evident that the stock is gaining some momentum to the upside and having broken other more important MA lines already, probabilities favor the upside. Support should be minor to decent at the 9.00 level and strong down at 8.60. The stock did gap up on Friday between 9.08 and 9.11 and if able to get above 9.32 (Friday's high) and more importantly above 9.52, it will be seen as a breakaway/runaway gap formation, which would likely generate new strong buying. STP treaded water this past week where nothing was decided. On a daily closing basis, support is found at 8.53 and important resistance at 9.10, a break above either of those 2 levels will likely cause further movement in that direction with the upside resistance being much more important than the support. No indication was given this past week as what will happen, but the stock is likely to respond to whatever the indexes decide to do. IR continues to generate a short-term rally making yet another green weekly close and this time it was a new 39-month high. Nonetheless, the stock was unable to get above the intra-week high seen on February 7th at 49.07, as well as generate a new 39-month daily closing high in spite of the strong rally seen in the indexes in the last 2 days of the week, thus leaving questions somewhat unanswered. The stock did close in the upper half of the week's trading range suggesting further upside will be seen this coming week. By the same token, the stock did close in the lower half of Friday's trading range suggesting that some weakness will be seen at the beginning of the week. Support on a daily closing basis will be at 47.47 (47.02 intra-day) and if the stock generates a close below that level further downside could be seen with 45.50 as the objective. Any rally above 49.07 and/or a close above 49.03 would suggest the stock will visit the $50 level. MMM negated the sell signal given the previous week by closing above the previous low weekly close support at 90.25. Nonetheless, the stock was unable to generate a new buy signal when it failed to close above the previous 40-month weekly closing high at 92.96. On a negative note, the stock generated a red close on Friday making Thursday's close at 92.58 into a successful retest of the 40-month high daily close at 93.75. The stock did close near the lows of the day on Friday and the probabilities are high that a drop back down to the 50-day MA, currently at 90.40, will be seen. The stock does have an open gap between 90.10 and 90.17 which should also work as a magnet. Closure of the gap would be considered a slight negative, while holding the gap open would be considered a slight positive. On an intra-day basis, the 89.27 level is considered support and the 40-month high at 94.16 is considered resistance. A break above or below either of those 2 levels should generate continued movement in that direction. CIT continues to show weakness in spite of the strength in the indexes as the stock was unable to generate any rally of consequence this past week and closed on Friday at the previous 3-month low daily close at 41.82. The 200-day MA is currently at 41.35 and should act as support, but a close below both of those levels will be quite bearish, likely thrusting the stock down to the $40 level. A daily close above 42.54 would now be considered a mini short-term buy signal. Probabilities favor the downside. AMZN generated a bounce up from last week's break of support and sell signal. Nonetheless, the stock failed to get above the previous low weekly close at 171.14, suggesting that no further upside will be seen unless the indexes carry it upwards. The stock did close in the red on Friday but not by a sufficient amount off of Thursday's close to say the stock has found a top to this rally. Nonetheless, another red close on Monday would suggest the upside rally has fizzled out and that drops back down to or near the $160 level will be seen. The stock is showing a gap this past week between 166.26 and 167.36. Since there was no news to cause the gap, the probabilities are high the gap will be closed as the stock is presently on a short-term downtrend. Moves down to test the gap area are likely to be seen on Monday as the stock did generate a reversal day with a higher high than Thursday and a red close as well as a close near the lows of the day. There is also some decent previous intra-week support at 166.90 and the probabilities are high the stock will get down to those levels Monday or sometime in the first part of the week. Any rally above Friday's high of 173.49 will likely cause the stock to rally up to 176.50 where the 50 and 100-day MA's are currently located. Probabilities favor the downside, at least for a drop back down to 166.90.
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1) ELON - Averaged long at 8.71 (2 mentions). No stop loss at present. Stock closed on friday at 9.23.
2) DCTH - Averaged long at 7.50 (2 mentions). No stop loss at present. Stock closed on Friday at 7.15.
3) FCEL - Averaged long at 1.7625 (4 mentions). Stop loss now at 1.63. Stock closed on Friday at 2.05.
4) SVNT - Purchased at 10.05. Averaged long at 9.686 (3 mentions). Stop loss at 8.96. Stock closed on Friday at 10.13.
5) STP - Averaged long at 9.345 (2 mentions). No stop loss at present. Stock closed on Friday at 8.91.
6) CIT - Averaged short at 43.363 (3 mentions). Stop loss lowered to 43.10. Stock closed on Friday at 41.82.
7) IR - Averaged short at 44.88 (2 mentions). Stop loss at 49.17. Stock closed on Friday at 48.18.
8) LVS - Covered shorts at 38.32. Averaged short at 40.725. Profit on the trade of $501 per 100 shares (2 mentions) minus commissions.
9) AMZN - Shorted at 173.14. Stop loss at 173.59. Stock closed on Friday at 170.98.
10) MMM - Shorted at 92.80. Stop loss at 94.26. Stock closed on Friday at 92.27.
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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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