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Issue #363 
February 9, 2014 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| As Expected, Indexes Rallying From Their Lows!
DOW Friday closing price - 15794
The DOW generated a positive reversal on the weekly chart, having made a new 16-week low and then closing in the green and on the highs of the week. What was even more important was the fact the index bounced off of the 50-week MA, currently at 15340 (low this past week was 15342), as well generating a green weekly close making the previous week's close at 15698 into a successful retest of the previous all-time high weekly close seen in July at 15658, meaning that the uptrend on the weekly chart for the past 15 months remains inviolate, both on a weekly closing basis as well as on the MA line.
The DOW closed on the highs of the week and further upside is expected to be seen this week, especially since fundamentally there are no catalytic earnings or economic reports scheduled to be released this coming week that could stop the upward momentum that started this past week. It does need to be mentioned that the index dropped 1248 points over the past 5 weeks and it was mostly on a straight down basis, meaning that there is little resistance on the way up. It should be mentioned that the all-time high at 16588 has not yet been retested\ and this rally is likely to be all about a retest of the highs or resumption of the uptrend.
On a weekly closing basis, there is minor to perhaps decent weekly close resistance at 16086 and strong resistance at 16458/16478. On a daily closing basis, there is only very minor resistance at 15848 and again at 15928 and then nothing until minor to perhaps decent resistance at 16097. Above that level, there is minor resistance at 16257, decent at 16481 and strong at 16576. On a weekly closing basis, support is minor to perhaps decent at 15698, minor at 15665, minor again at 15072 and decent to perhaps strong at 14799/14810. On a daily closing basis, there is minor support at 15739, minor again between 15658 and 15676, and then nothing until the now decent support at 15372.
The DOW is now likely to continue higher up to at least the 16058 level as the resistance near-by is minimal at best. Stronger resistance will be found at 16173, which includes the 50-day MA currently at 16100. Additional but minor resistance will be found at the spike low seen on January 13th at 16240 that if broken would likely be indicative that the index is resuming the uptrend. By the same token, a rally up to the resistance levels mentioned would simply be considered technical trading with a needed retest of the highs if the index has topped out.
The DOW dropped 7.6% over the past 5 weeks and such a drop could be considered the seasonal correction. By the same token, the DOW the question now likely to be asked is whether this is the kind of correction that is simply a normal one from an overbought condition or just the "beginning" of a larger correction of consequence like what was seen in July 2011 when the index dropped 19.2% in price. The answer to the question is likely to be a little of both. In 2011 the index corrected a total of 7.2% in value the first time it went down and then generated a fast retest of the high 4 weeks later before entering into the stronger correction of 19.2% that found the low of the move 5 months later in October. With the index dropping down to the 200-day MA this past week and having corrected 7.6% value it is possible that the index is mimicking what happened in 2011 and that this rally will also simply turn out to be a fast retest of the highs before the stronger correction occurs. If that is the case, the DOW will likely continue to rally for the next 2-5 weeks and then get within a few weeks of May where the "sell in May and go away" adage kicks in.
The DOW moved up in price this past week without any kind of a positive catalyst occurring (economic reports were mostly less than expected), meaning that most of the rally was technical in nature. That scenario is likely to continue since there are no catalytic reports scheduled for this week. The bears had the bulls on their backs over a precipice but were unable to deliver the killing blow, meaning that the bulls will now likely be the ones putting on the pressure until the selling once again begins to overwhelm the buying. The area most likely to accomplish such a scenario is around 16173-16240.
It can be expected that the DOW will move up further this week and not encounter strong selling interest until the upside resistance levels are reached. Nonetheless, such a rally is not likely to occur in just 1 week as selling interest will remain due to the recent 1248 point drop. Expect further upside but somewhat limited in nature and scope.
NASDAQ Friday closing price - 4125
The NASDAQ continues to maintain its leadership role having rallied 3.8% from the lows this past week, versus the DOW rallying 2.9% and the SPX rallying 3.4%. In addition, the index maintains a strong bullish scenario having held itself above the 100-day MA whereas the other 2 indexes broke that line and in the case of the DOW even reached the 200-day MA, suggesting more trader doubt is found there than in the NASDAQ.
The NASDAQ did generate a reversal week having made a new 10 week low and then closing in the green and on the highs of the week. In addition, and probably more indicative, the index closed above the only high daily close resistance seen in the last 14 days at 4123 (the other indexes did not even have such a resistance), meaning that the only resistance now found above prior to reaching the 13-year high at 4246 is at 4177. Simply stated, the index accomplished more than the other 2 indexes, suggesting that in the case of the NASDAQ alone, there is still a good chance the index will make a new 13-year high before a top is found.
On a weekly closing basis, minor to perhaps decent resistance is found at 4197. Above that level, decent to perhaps strong resistance is found between 4234 and 4246. On a daily closing basis, decent resistance is found at 4176, minor at 4218 and decent to perhaps strong at 4243. On a weekly closing basis, support is minor at 4103 and decent at 4000. Below that level, there is minor support at 3919, and at 3791, and decent at 3589. On a daily closing basis, support is minor at minor to perhaps decent at 4113, minor at 4051 and decent at 3996/3998.
On an intra-week basis, he NASDAQ shows some resistance at 4135 but having closed on the highs of the day/week on Friday at 4125, the probabilities of that resistance level getting broken on Monday are high. If the index breaks above 4135 it will most likely generate a rally of at least 42-47 points (up to 4177-4182), especially since there is a total vacuum of resistance above until that area is reached. It should be mentioned that the index has not yet totally fulfilled its upside objective as on an intra-week basis prior resistance is not found until the 4259/4289 level is reached. Having generated only a 4197 weekly high close and a 4246 intra-week high, the door is certainly open for some further upside to be seen, up and above what has already happened.
As far as support is concerned, the NASDAQ this past week broke below the 3979 level of support that was considered important. Nonetheless, the break only took the index down to 3968 before the break was negated, likely meaning that instead of a break being seen, the index now shows a strong double low having been made at 3979/3968, which in turn could help generate the kind of buying needed to make a new 13-year high. The weekly chart does suggest that a drop down to 4044 could occur within the context of a still up-trending index but the daily chart suggests that the support at 4097/4103 is now likely indicative. If the bears are unable to get the index below 4097/4103 any day this week, the probabilities will strongly increase that a new 13-year high will be made. If the bears are successful in breaking that support, the probability of a new 13-year high being made will decrease substantially.
To the upside, it is still all about the 4259-4289 area of intra-week resistance with a small possibility of seeing 4303. On a weekly closing basis though, the 4234-4246 resistance level is still the most important.
The probabilities not only favor the NASDAQ going up this week but putting itself in a position to make new 13-year highs sometime in the next couple of weeks. The indexes are still giving mixed signals with the other indexes unlikely to make new highs. Until all the indexes are on the same page the market is unlikely to get into the kind of correction that has been called for and is expected to be seen.
SPX Friday closing price - 1797
The SPX is still the index-that-follows rather than the index-that-leads, meaning that action seen is not all that indicative. On Monday, the index broke the support at 1767 convincingly and that should have generated a move down to the 200-day MA, currently at 1710, and yet the index stopped in the middle of nowhere at 1737 and reversed direction, likely because the other indexes found supports of consequence and rallied off of them.
The SPX will have a chance to show some leadership this coming week as the resistance level close by above between 1813 and 1815 has a high degree of probability of being reached this week, likely more so than the other indexes reaching their own resistance levels, meaning that the traders in the index may find themselves in a position of being the bell-weather for the market this week depending on whether the resistance level holds up or breaks.
On a weekly closing basis, there is minor to perhaps decent resistance at 1805 and decent resistance at 1841/1842. On a daily closing basis, there is minor to perhaps decent resistance at 1808, minor at 1842 and decent at 1848. On a weekly closing basis, there is minor support at 1781 and decent support at 1775. Below that level, there is minor support at 1690 and minor again at 1667. On a daily closing basis, support is decent at 1775 and then nothing until decent support is found at 1741. Below that, there is decent support between 1700 and 1710.
With the indexes giving mixed signals over the past few weeks, the SPX has been somewhat the mediator between the NASDAQ that continues to look bullish and the DOW that has looked weak. So far the index has sided more with the NASDAQ than with the DOW but that is not the norm and when that reverts back the other way, it will likely be a clear signal that a direction of consequence for the market is forthcoming.
To the upside, the SPX is going to find decent intra-week resistance between 1813 and 1815. With that level only 16-18 points above Friday's close, the possibility of that area being seen this week is high. A break above that area is likely to be meaningful as there is no other resistance of consequence until the triple top at 1848/1849 is reached. The probabilities of the SPX making a new all-time high alongside the NASDQ making a new 13-year high is likely to depend on what happens at 1813/1815.
To the downside, the SPX will once again have pivotal support at 1767 that if broken for a second time would likely mean that the recent low at 1737 would be broken as well and the 200-day MA at 1710 reached. As such, the index is in a 48-point range between 1767 and 1815 that is likely to give a clear signal as to where the next 50 points thereafter will go to.
The important economic reports this past week (ISM Index and Jobs Report) disappointed but the end result was a rally and of some consequence. It does suggest that the market is now acting technically with fundamental news taking a back seat, likely because there is no little chance that the economic news will be surprising enough to actually cause a major sell-off or rally.
With most of the important earnings reports out already and no economic reports of consequence due out for another 3 weeks, the traders are likely to key on what the charts suggest will happen. In this case, the charts do suggest the NASDQ will make new 13-year highs, the SPX has a 50-50 chance of making new all-time highs, and the DOW has low probabilities of a new high being made. By the same token, it is important to note that the Debt Ceiling issue has to be decided by the end of February and that is a monkey wrench for the negative side that is difficult to predict how it will turn out.
Nonetheless, for this coming week the probabilities favor further upside for all indexes with the big question being mostly how much upside will be seen before the selling interest resumes. Expect mostly positives this week.
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Stock Analysis/Evaluation
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CHART Outlooks
The indexes did exactly as I was expecting them to do last week and the probabilities of further upside are now high. Nonetheless, this rally is likely to be simply a retest of the recent high and with many stocks already having rallied from their recent lows, the upside potential on purchases is limited and with bad risk/reward ratios. In my opinion the longer term outlook is negative, meaning that short positions will be the preferred way to go. By the same token, this coming week may not be the best time to short stocks as upward movement could be seen for another couple of weeks, at least until the end of the month when the Debt Ceiling issue must be resolved and/or the next set of important economic reports come out.
Nonetheless, I do want to start looking at shorting stocks and the mentions I have made in this newsletter are in stocks that are near levels that can be considered for shorting, even though the possibilities suggest that the desired entry points may not be reached this week and/or reached and surpassed but still good shorts for the longer term.
There are 3 mentions in this week's newsletter but depending on the action there may be more. If so, I will mention them in the message board.
SALES
LEN Friday Closing Price - 41.77
LEN is a stock in an industry (housing) that remains under fundamental pressure and unlikely to generate a major breakout to the upside at this time. In fact, going all the way back to 2004, the stock has shown decent resistance/support on a weekly closing basis between 41.87 and 45.90, having generated a total of 5 low weekly closes between 41.87 and 42.45 and 6 high weekly closes between 42.12 and 45.90. Recent resistance has been strong with 3 of those previous high weekly closes being seen between January and May of last year at 42.12, at 43.07 and 43.82. It should also be mentioned that on a monthly closing basis, the stock shows decent resistance between 41.54 (recent) and 42.68 (older), suggesting that new highs are unlikely to be seen but that on an intra-month basis it could happen.
LEN has been on an uptrend since August of last year when the stock got down to the 30.90 level, having rallied already close to 38% in value during the last 5 months considering last week's high at 42.25. In addition, the stock has been particularly strong the last 2 weeks having rallied from 36.40 to Friday's high at 42.25, meaning that if the indexes remain strong for the next week or two that the recent highs could be broken on an intra-month basis and the older monthly high close at 42.68 tested.
LEN closed on the highs of the week and further upside is likely to be seen this week with 42.68 as a very viable upside target but with the 43.18 level as the likely first objective. Whether further upside and new 7-year highs will be seen or not is not something that can be speculated on at this time, but sales of the stock above 42.60 are likely to end up being profitable in the longer term. It also means that short positions should be instituted at that level though stop loss placements cannot be clearly determined yet, or at least not using recent highs.
To the downside, LEN does show 2 possible objectives depending on what happens over the next 2 weeks. If the stock fails to break the recent high at 44.40, then the downside objective would be the 200-week MA, currently at 26.50. If the stock does get above the recent high at 44.40, then the downside objective would be raised to 33.92. The probabilities favor the former over the latter but until the high of this rally is determined I cannot give a clear probability rating on what downside objective will be reached.
Sales of LEN between 42.60 and 43.18 and using a 46.35 stop loss and a 33.92 objective will offer a 2-1 risk/reward ratio. Nonetheless, the probabilities of a new 7-year high being made are low, meaning that the stop loss would then be placed at 44.50 and the objective would change to 26.50, meaning the risk/reward ratio would skyrocket to 8-1.
My rating on the trade is a 4 (on a scale of 1-5 with 5 being the highest).
CAT Friday Closing Price - 94.87
CAT has been on a tear to the upside since November's low at 81.87. The rally began in December when the stock made a new 9-month high, breaking above what seemed at the time unbreakable resistance and causing a strong short covering rally to occur. Nonetheless, the recent rally seen recently is based on a slightly better than expected earnings report as well as on a $1.7 billion dollar stock re-purchase plan that was announced.
CAT now seems to be getting slightly overdone to the upside and though further upside is likely to be seen this week and perhaps next, the reality is that the news does not support this kind of a rally (at least based on what analysts were saying before all the positives mentioned above happened). In addition, the stock is now nearing a strong to perhaps major area of resistance at $100 (especially from a psychological point of view) that is going to be close to impossible to breach unless the stock market resumes its uptrend (unlikely).
It should be mentioned that for 3 months back in the latter part of the year in 2011, the 98.00 level was strong resistance. In January 2012 CAT broke above that level and got up as high as 116.95 and stayed above the $100 level for 4 months with $100 becoming strong support. By the same token, once the stock broke below $100 in April 2012, the $100 dollar level became strong resistance having been seen only once on January 2013 and then dropping all the way back down to the $80 level before new buying was seen.
It is likely that the $98 level will be seen on this rally and it could happen this coming week. Nonetheless, the $98 level stopped the rally once before and caused the stock to drop down to $86 a few weeks later. Even if the $98 level is broken (unlikely at this time), the $100 is going to be extremely difficult to break, meaning that any sale between $98 and $100 is likely to bring in a good profit.
To the downside, CAT does not show any support of consequence on the weekly chart until the $86 level is reached, and even on the daily chart, the closest support is not found until the $89 level is reached, meaning that if the expected selling is seen up at $98, that a fast $9 to $12 drop is likely to occur.
Sales of CAT between 97.70 and 98.30 and using a stop loss at 100.35 and having an $86 objective will offer a 6-1 risk/reward ratio. It should be mentioned that the probabilities are still decently high that the stock will drop back all the way down to the stronger support at $80, making the risk/reward ratio even higher.
My rating on the trade is a 4 (on a scale of 1-5 with 5 being the highest).
FROM LAST WEEK AND STILL VIABLE:
RHT Friday Closing Price - 56.99
For the past 22 months, RHT has traded mostly sideways having been in the $50-$60 for 80% of the time. Nonetheless, during those 22 months the stock only traded above $60 for 4 weeks (up to 62.75) while it has traded below $50 for 22 weeks down to 41.89, suggesting that there is more inherent weakness than strength. In addition, the stock for the past 16 months has shown the $60 level to be a brick wall, having been up to 60.00 on September 2012 and again just 2 weeks ago to 60.19. The failure to get above $60 has to be considered a strong negative, especially after the December earnings report that came out much better than expected and caused a spike rally to occur of $12.01 that took the stock up that week to 58.71. Nonetheless over the past 6 weeks the stock has only been able to add on an additional $1.38 but saw itself down $3.80 on Friday from that high, suggesting all the original buying interest after the earnings report has now dissipated.
RHT made a new 6-week low this past week, getting below the low at 55.16 seen right after a spike rally occurred (got down to 54.90), suggesting selling interest is now being seen. The drop down to 54.90 was likely caused because of the overall weakness in the index market and if the indexes rally from here, it is likely the stock will do the same. In fact, the stock made a new 6-week low last week but then closed in the upper half of the week's trading range, suggesting that further upside above last week's high at 57.42 will be seen.
It should be mentioned that the recent high in RHT at 60.13 has not yet been tested successfully and with the probabilities being high that the stock will get above last week's high this week, it could end up being the needed retest before the stock heads lower.
To the upside, RHT will show minor resistance at 58.62 and stronger resistance at 59.49. The strongest resistance will be at 60.00/60.19 but if the stock gets up to that level again it will generate a triple high that will have a high probability of being broken and a rally to the all-time high at 62.75 will then likely ensue.
To the downside, RHT will show minor support between 54.90 and 55.10 and then nothing of consequence until the 49.25 level is reached, which does include the 50 and 100 day MA's. For all intents and purposes, that will be the objective of this mention. Nonetheless, it should be mentioned that the stock broke the 200-week MA in October of last year, for the first time in the last 54 months, meaning that if the stock starts trading below the $50 level again, that the 200-week MA, currently at 46.85, could be broken again. If that scenario occurs, the stock could get into a new sideways trend between $40 and $50 that would increase the profit potential of this trade.
Sales of RHT between 58.62 and 59.49 and using a 60.35 stop loss and having an objective of 49.25 will offer a 5-1 risk/reward ratio.
My rating on the trade is a 3 (on a scale of 1-5 with 5 being the highest).
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Updates
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| Updates on Held Stocks |
Closed Trades, Open Positions and Stop Loss Changes |
| AIG technically had a positive reversal week inasmuch as the stock made a new 5-month low and then closed in the green. Nonetheless, on a weekly closing basis the action was a bit more short-term positive as it was the second green weekly close in a row after an 11% drop in price the previous 2 weeks. The stock did close on the highs of the week, suggesting further upside will be seen this week. The stock does have a bearish double top on the weekly closing chart at 52.30/52.22 that is not likely to get broken but is likely to be tested since no successful retest has yet occurred. The stock had a high of 50.99 in September of last year that is likely to work as a magnet for the next week or two. That is the objective of the mention made. The stock will find resistance starting at the $50 demilitarized zone, especially since both the 50 and 100 day MA's are both currently at 49.85. Additional but minor resistance is found at 50.40. The probabilities are high that at least those levels will be reached and probably this coming week. Indicative support is now likely found at 48.03 which is where the 200-day MA is currently at. ARNA generated some follow through to the downside this past week but did it all on Monday and spent the rest of the week trading in a sideways manner between the low of the week at 5.75 and 6.20. The stock held above a minor but likely indicative minor support at 5.72, keeping the door for the uptrend to resume or a retest of the recent 7.95 high to occur. The stock closed in the middle of the week's trading range, leaving the door open for the stock to move in either direction, likely dependant on what the general market does. By the same token, since the stock is still in a short-term uptrend without the recent high having been tested, the probabilities slightly favor the upside. Indicative short-term minor resistance is found at 6.24 and then stronger and more indicative resistance is found at 6.71 that includes the 200-day MA, currently at 6.60. The stock did close on the highs of the day on Friday and the first course of action should be to the upside, suggesting that something may be decided early in the week. The probabilities do favor the stock rallying up to 6.71 but after that it will likely depend on outside forces such as fundamental news or what the overall market does. CALM generated the 6th red weekly close in a row but it is important to note that no further intra-week downside was seen this week as the low for the week was the same as the previous week. The close for the week was uneventful as it was just slightly below the middle of the week's trading range but in the important $50 demilitarized zone. The $50 level is considered an important and pivotal psychological support and having seen a 20.3% correction from the highs of the rally, and the high not having had a retest yet, the probabilities strongly favor some retracement to the upside being seen this week. Minor resistance will be found at the high seen the last 2 weeks at 51.76 and further and a bit stronger resistance being found between 52.43 and 52.99 that includes the 100-day MA, currently at 52.60. Further resistance will be found at the 50-day MA, currently at 54.50, but since there is no previous resistance at that level, the stock is likely to get up as high 56.53 on an intra-day basis if able to get above 52.99. To the downside, the stock now shows a confirmed double low at 48.90 that if broken could cause the stock to drop down to the next intra-week support at 43.65. Nonetheless, the 50-week MA is still currently at 48.55 so the stop loss at 48.05 will remain in place. Probabilities now favor some upside this coming week with the only question likely to be how high? ELON received slightly less than expected earnings on Thursday evening, as well as a downgrade on Friday from a buy to a hold, causing the stock to fall 25% in value overnight. By the same token, it should be mentioned that the rally seen recently was not based on anticipation that earnings would be better but in anticipation that the company might become a takeover/merger target due to the recent interest by Google in the industry. As such, the earnings report is not likely to be as negative as Friday's action might suggest as the company is still a takeover/merger candidate. On the technical front, the stock is likely to retest the 100-week MA, currently at 2.85, which was a line that had not been broken to the upside since July 2011 (31 months). A retest of that line was to be expected at some point and now it is likely to happen this coming week since the stock did close near the lows of the week and further downside below last week's low at 3.00 is likely to occur. The outside chart parameters for the stock are likely to be 2.85 to the downside and 4.19 to the upside, with most of the trading likely to occur between 3.05 and 3.75 until new information about the industry comes out, which in most likelihood would be a positive as the industry is in its infancy and with great prospects for the future. EPD had a negative reversal week having made a new all-time high and then generating a red weekly close. Nonetheless, the reversal was not as convincing as it could have been since the stock rallied on Friday to close out the week in the middle of the week's trading range, leaving the door open for new buying to come in if the indexes continue higher. By the same token, Friday's rally did not close on the highs of the day even though the indexes closed on the highs of the day/week and the stock did get up close to an important resistance at 66.36 with a rally up to 66.25, meaning that there is a good possibility that the rally on Friday was the "needed" retest of the double top now in place at 66.92/66.88 and that the stock will move lower even if the indexes move higher. It is important to note that the stock gapped up on Friday between 65.22 and 65.33 and if the gap is closed then Friday's high will be a successful retest of the recent high. By the same token, if there is a second gap generated and the stock rallies above the recent high at 66.92, the covering the shorts will be the only thing to do. Simply stated, the 65.22 and 66.92 levels are likely to be the deciding factor on what the stock is going to do. A break below 63.02 would now be a clear and likely unmistakable sign that a top has been set. FCEL for the past 3 weeks has traded in a very narrow trading range between 1.33 and 1.52, suggesting it is presently in a "pause" format but leaning to the bull side if for no other reason than the stock continues to trade above the 200-week MA, currently at 1.32. Intra-week support is found in layers down to 1.28 and intra-week resistance is also found in layers up to 1.63 and then again up at 1.95. With this stock not being overly sensitive to the indexes, direction is going to have to wait for news to come out, though the probability favors a slight upward bias if only because the downtrend has been broken. FSLR once again made a new 16-week low this past week but kept itself above the 50-week MA, currently at 45.85, that has not been broken for the past 15 months. The recent downtrend continues with the stock having generated a red weekly close on Friday, the 9th out of the last 12 weeks, while showing yet no signs that the trend is ready to turn around. Nonetheless, it could be surmised that last week's low at 47.04 might end up being the low for the move down since it is a general support ($3 below the important psychological support at $50) as well as $1.15 cents from the also important 50-week MA. The line has been tested successfully twice in the last 15 months and one of those retests was in March of last year when the stock fell to within $1.45 of the line. The stock did close near the highs of the week suggesting it is possible and even likely that the stock will go above the previous week's high for the first time in the last 6 weeks. Such action, given the information above, could be a sign that the stock has "turned the corner" and that some new buying will appear. Minor resistance is found at 51.60 and stronger and more indicative at 52.13. Further resistance is found at 53.65 (including the 50-day MA) and again at the gap area at 54.65. Probabilities favor a rally above last week's high at 50.85 but after that it will depend on whether the 51.60 level of resistance is broken or not. For the time being, the chart continues to favor the bears, at least for the short-term. GS generated the 4th red weekly close in a row but did get down to the 50-week MA, currently at 160.00, that has not been broken for the past 18 months. In addition, the stock has fallen 12% from its recent high of 181.13 without a retest of that high, suggesting that before further downside is seen that a rally will occur. Nonetheless, the stock did close slightly in the lower half of the week's trading range, suggesting that further downside below last week's low at 159.77 will be seen this coming week. The stock did break the 200-day MA a week ago, currently at 162.40, and the bulls were unable to close above the line any day last week, suggesting weakness. By the same token, no follow through to the downside has been seen either, meaning that the $160 level is a pivotal area. The stock did make a new 4-day high on Friday as well as a close on the highs of the day, suggesting the first course of action for the week will be to the upside. Should the bulls be able to follow through on Friday's action and get above 166.55, the probabilities will increase strongly that a rally up to the $170 level will occur. By the same token, the fact the stock has stayed below the 200-day MA for the last 6 trading days, likely means that the bulls are not going to be very successful in re-starting the uptrend and that the $170-$171 level is the most they can accomplish at this time. It is evident that this week is short-term pivotal for the stock but thinking that the indexes are likely to go up this week, does give the bulls enough of an opportunity to generate some upward movement. HOT had a positive reversal week having made a new 8-week low and then closing in the green and on the highs of the week, suggesting further upside is likely to be seen. The bulls were successful in getting above a decent resistance area at 75.45 and with only the 50-day MA, presently at Friday's high at 76.55 and a minor resistance at 77.47, the probabilities strongly favor a run up to the resistance found at 79.77. In addition, this past week's low at 72.00, in conjunction with a previous low seen in December at 71.97, does mean that a double low is in place, which in turn opensn the door for the stock to perhaps make a new all-time high above 81.39, much like the NASDAQ is poised to do. Nonetheless, the stock has a high probability of getting up to the $80 demilitarized zone before any selling of consequence appears. A drop on Monday below 75.00 would be considered a negative. HPQ had a positive week in which a new 3-week low was made but the stock closed in the green and on the highs of the week, suggesting that further upside above last week's high at 29.29 will likely be seen. Nonetheless, the bulls have still been unable to generate a close above the 200-week MA, currently at 29.40, and though it is likely that level will be seen, and perhaps even surpassed on an intra-week basis, the probabilities continue to suggest that further upside will be limited. A rally above 29.29, followed by a failure to follow through next week, would become a successful retest on the weekly chart of the recent high at 30.13. Such a retest is needed before the bears can become more aggressive in pushing the stock down. By the same token, if the bulls are able to get above the recent high at 30.13 and even more so if able to get above the top of the demilitarized zone at 30.30, then further upside could be seen. It is likely that the next 1-3 weeks will be pivotal for the stock. KGC made a new 13-week weekly closing high on Friday and closed on the highs of the week, suggesting that the stock may now be ready to begin to make some inroads to the upside. Pivotal resistance remains at 4.88 but having gone that high last week and closing near the high of the week does suggest that the level will be broken and that further upside up to the next resistance level at 5.21 will be seen. A break above 4.88 will mean that the recent low at 4.23 will become strong support as well as a likely bottom to the downtrend. The 200-day MA is currently at 5.20 and that line has not been broken for the past 13 months. A break above that line on a daily closing basis, would strongly suggest that the downtrend is over and that a sideways trend will take its place, with the probabilities of the stock trading between 4.50 and 5.50 for the next few weeks and/or months. Probabilities do favor that scenario now occurring. YGE generated a new 5-week low last week with a drop down to 5.37 as well as the third close in a row below the 200-week MA, putting the stock in a precarious position that if the minor but indicative support at 5.33 is broken that the 200-day MA, currently at 4.90, will be tested. It will also open the door for the stock to head as low as 4.40 where the 50-week MA is currently located. It is evident that the 5.33 level is short-term pivotal area that if broken would keep the selling pressure on and likely cause the stock to fall back down to the bottom of the $5 demilitarized zone. The stock did close near the lows of the week and further downside below 5.37 is likely to be seen but if the bulls are able to hold the stock at the 5.33 level and generate a rally, new buying will likely be seen. Pivotal resistance is now found at 6.37 which would also represent a break above the 200-week MA for the third time, likely meaning that the uptrend will resume and probably with some strength. Probabilities favor the bears at this point but this week is likely pivotal, at least for the short-term.
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1) ELON - Averaged long at 5.534 (4 mentions). No stop loss at present. Stock closed on Friday at 3.16.
2) ARNA - Averaged long at 4.36 (2 mentions). No stop loss at present. Stock closed on Friday at 6.00.
3) FCEL - Averaged long at 1.34 (5 mentions). No stop loss at present. Stock closed on Friday at 1.42.
4) EPD - Shorted at 66.21. Averaged short at 64.99 (3 mentions). Stock closed on Friday at 65.72.
5) KGC - Averaged long at 5.226 (3 mentions). No stop loss at present. Stock closed on Friday at 4.82.
6) CALM - Purchased at 49.76. Stop loss at 48.05. Stock closed on Friday at 50.05.
7) FSLR - Averaged long at 51.33 (5 mentions). No stop loss at present. Stock closed on Friday at 49.83.
8) HOT - Purchased at 72.67. Stop loss now at 71.87. Stock closed on Friday at 76.47.
9) AIG - Purchased at 47.22. Stop loss now at 46.69. Stock closed on Friday at 49.01.
10) YGE - Averaged long at 6.225 (4 mentions). No stop loss at present. Stock closed on Friday at 5.51.
11) GS - Purchased at 161.90 and at 160.62. Averaged long at 161.26. No stop loss at present. Stock closed on Friday at 161.93.
12) CAT - Covered shorts at 92.55. Averaged short at 93.225. Profit on the trade of $106 per 100 shares (2 mentions) minus commissions.
13) AMZN - Covered shorts at 347.84. Shorted at 405.17. Profit on the trade of $5833 per 100 shares minus commissions.
14) HPQ - Averaged short at 29.425 (2 mentions). Stop loss now at 30.35. Stock closed on Friday at 29.07.
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The opinions and commentaries by Mr. De Vito are not a recommendation to buy or sell, but rather
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