Issue #379
June 1, 2014
The Oasis

Newsletter


The newsletter with chart analysis for stocks and stock indexes

Stock Indexes Analysis/Evaluation


Pivotal Week Ahead. Fundamental News - a Catalyst?

DOW Friday closing price - 16717

The DOW generated a new weekly closing high on Friday, above the previous one made last week at 16606, but once again failed to make a new intra-week high as the index fell short by 14 points of 16735, suggesting that the buying interest continues to be limited. Once again though, the index closed on the highs of the week and further upside is likely to be seen this week but this time with a high probability of making a new intra-week all-time above 16735.

The DOW ended up generating a weekly close at what is considered a "general" resistance area at 16700 (300 points below an even level such as 17000), meaning that there is a decent possibility that next Friday the index will close in the red and show some topping action from where the "sell in May and go away" adage can begin to develop. In the year 2000, the index got up to 11750 and generated a weekly close at 11721, possibly suggesting that the same "general" resistance level will stop the rally this time around.

The DOW will be getting important fundamental news this week in the way of the ISM Index on Monday and the Jobs Reports on Friday but the probabilities favor profit taking occurring after the reports unless they are overwhelmingly bullish (unlikely). In addition, the index has recently been supported by the NASDAQ rally as that index was in need of a retest of its 14-year high, but with that index now having reached the minimum high required for the retest, meaning that the DOW is now likely to move more on its own than as a shadow partner.

To the upside, the DOW only has minor intra-week resistance at 16735 that is likely to get broken early Monday morning. Above that level there is no prior resistance but as the index nears the strong psychological resistance at 17000, the selling is likely to increase. To the downside, the DOW has built decent support around the 16300 level, having been down to that general area 3 times over the past 4 weeks (16312, 16357, and 16340). In addition, the 50 and 100 day MA's are both in that general area as well, suggesting that for the traders it has become a pivot point that if broken would suggest the top is found. Further but minor support is found at 16240 and then the strong support at 16015/16046 that is considered a double low that if broken would likely bring in new selling.

On a more sensitive note, if the DOW goes above last week's high at 16721 (likely) and then turns around and goes below last week's low at 16607, it would be considered a negative statement, especially because of the level of general resistance as well the fact the economic reports of importance will have come out.

The DOW continues to inch higher but not in an impressive manner as the index is only 129 point higher than where it was on December 31st. The "sell in May and go away" adage has been consistent and dependable in the past and there seems to be no reason why it will not happen again this year. By the same token, the correction itself is more of a summer thing than a May thing, such as was seen in 2011 when the index did not start the 20% correction until July, meaning that it can begin anytime over the next 1-6 weeks. The probabilities favor it starting within the next week or two because after this week there are no scheduled economic reports of importance that can be used as a catalyst due out for another 4 weeks.

NASDAQ Friday closing price - 4242

The NASDAQ had a strong positive week after gapping up on Tuesday between 4186 and 4204 and then getting slightly above decent intra-week resistance at 4246 with a rally up to 4250. The index closed near the highs of the week and further upside above 4250 is likely to be seen, with 4285 being the first target.

The NASDAQ had a volatile day on Friday, having generated a negative reversal day after going above Thursday's high at 4247 and below Thursday's low at 4228. Nonetheless, the index closed in the red but near the highs of the day, suggesting the negative reversal will become a successful retest of the gap area if the index rallies above 4250 on Monday rather than a sign that that the resistance at 4246 will hold.

The NASDAQ has now accomplished the minimum required on the weekly chart to retest the 14-year high at 4371, meaning that from here on in the traders will not have a magnet to draw them higher. By the same token, the action seen this past week does suggest that further upside will be seen and that a rally up above 4300, and perhaps as high as 4344, could still occur. A rally on Monday above 4250, especially if it happens "after" the ISM report comes out at 10:00am, will likely mean a rally up to the next resistance.

To the upside, the NASDAQ will show resistance at 4285, at 4344 and at the 14-year high at 4371. Nonetheless, a break above 4285 would be a strong short-term positive that could generate enough buying to carry the index to the 14-year weekly closing high at 4336 or even to the daily closing high at 4356. A rally up to 4356 would be hugely similar to the 2011 rally that took the index to within 9 points of the previous intra-week high at 2887 and as such has a decent probability of occurring.

To the downside, the NASDAQ will show minor support at the top of the gap area at 4204 and if the index gets above 4250 on Monday, support will also be found a Friday's low at 4222. Should the gap be closed at 4186, the index shows minor intra-week support at 4131 and then nothing until 4035. Further but minor support is found at 4025, at 4021, and at 4014 where the 200-day MA is currently at. Strong intra-week support is found at the year's low at 3946 but any daily close below 3996 would likely mean the index is heading lower. It is important to note that there is a triple bottom on the daily closing chart at 3998, 3996, and 3999 that does suggest that at some point that level will be broken.

The 4246 area in the NASDAQ, give or take a few points above or below, is extremely pivotal as it was a high of consequence in January and a low of consequence on 2 occasions in February. It is also the area where a right shoulder would be built if the index is in the process of building a Head & Shoulders formation. As such, that level has strong meaning in a lot of ways. It is highly likely that if the index rallies on Monday that the 4285 resistance will be broken and that the index will rally up to the low or mid 4300 level.

It should also be mentioned that if the NASDAQ does rally above 4250 this week that it would also be a rally above last month's high at that price and would put the index in a situation that if 4371 is not broken to the upside in June and in July the index goes below whatever low is made in June, that a successful retest of the highs will have occurred on the monthly chart. Such a retest has only occurred once before in the last 5 years and that was the occasion when the index then corrected 20% over the following 3 months.

It is evident that everything is lining up for some major decisions/moves to be made in the NASDAQ over the next 1-6 weeks. The probabilities favor the bears based on the economy (not yet growing enough to support much higher prices) as well as on past history. Expect higher prices this week.

SPX Friday closing price - 1923

The SPX made a new all-time intra-week and weekly closing high and with the index closing on the highs of the day/week on Friday, further upside is expected to be seen. With no resistance above, the bulls will be trying to take the index up to the 2000 level, which must be considered a strong psychological target as well as resistance.

The SPX has now almost doubled in price over the past 2 years (1074 to 1924) and has done it without any correction of more than 10% occurring. Even then, each correction seen since the last big correction of 20% that occurred in October 2011 (7 of them), has been smaller and smaller than the previous one, with the last one seen in April being only 5%. It is evident that the index is overdone to the upside and overdue for a cleansing correction that will allow traders to find a new major level of support and once again consider substantially higher prices.

To the upside, the SPX has no resistance above other than a 3-point uptrend line using the last 3 highs made in December, March, and April that connects presently at 1925. By the same token, another way to figure out a potential upside target is by expecting that the previous all-time high seen in 2007 at 1576 is likely to be tested at some point and considering that the DOW and the NASDAQ corrected 20% in the May to October 2011 period, it would suggest a potential intra-week high this time around could be 1945 as a 20% correction from that price would take the index back down to 1576.

To the downside, the SPX shows support at the most recent low at 1862, especially since the 50-day MA is currently at 1870 and a break of 1862 would suggest the MA line would be broken as well. Since the MA line has been tested successfully on 3 occasions since April 16th but not broken, it would suggest that a break of that line would be a signal that a top to the rally may have been found. Further support is found at 1814 which is the low seen for the past 15 weeks and is the last spike correction low found on the chart. For the past 44 months, the index has not broken a previous spike low on the weekly chart, suggesting that a break of 1814 would be a clear signal that the index is in a strong corrective phase. On a shorter term basis and with the bulls committed to higher prices, last week's low at 1902 can now be consider minor but possibly indicative support.

For the time being, the SPX should be heading higher with either 1925 or 1945 as the upside objective.


The indexes continued higher this past week and all closed on the highs of the week, suggesting further upside will be seen. Nonetheless, this week important economic reports are scheduled in the way of the ISM Index on Monday and the Jobs report on Friday and that means the traders will have some tangible reasons for making decisions thereafter. With the "sell in May and go away" adage still un-started for this year, the traders could use these reports as a reason to sell even if the reports come in better than anticipated, as is expected they will.

Nonetheless, the charts do suggest that some upside will be seen this week in order to fulfill upside objectives, meaning that the week could see some strong buying at the beginning of the week and then selling at the end of the week, or the beginning of the next.

Stock Analysis/Evaluation
CHART Outlooks

The indexes continued to run but upside objectives are starting to be reached, suggesting that the market could be ready to find a top and initiate the "sell in May and go away" adage. Further upside is expected to be seen this week but it could be the last "hurrah" before a strong correction begins.

All mentions will be sales this week as the risk/reward ratios are now excellent for short positions and the probability ratings have increased slightly. Nonetheless, in most cases the stocks must rally to get up to the desired entry points and it is possible that it may not happen this week. As such, the mentions will still be viable for the following week. It should also be mentioned that based on the reaction of the traders to the important economic reports due out, the desired entry points may be lowered as needed. Those new entry points if necessary will be changed on the message board.

SALES

DD Friday Closing Price - 69.31

DD has been on a tear to the upside for the last 20 months, having moved up from the November 2012 low of 41.67 to last month's high at 69.38. Nonetheless, the stock is now getting near a level of resistance between $70 and $74 from 1997 and 1999 that brought about corrections of 28% and 46% down to the $50 and $40 respectively and having moved almost straight up close to $30 with only 2 corrections of less than 10% over the past 2 years does suggest the level of resistance and the odds of a strong correction occurring have increased strongly. This is especially true since this is a stock that for the past 15 years and on the monthly chart has normally averaged corrections of over 25% consistently (more than 8).

DD closed on the highs of the day/week/month on Friday and further upside above last month's high at 69.38 is likely to be seen. The stock has shown only 4 monthly closes higher than where the stock closed on Friday and those were at 72.81, at the all-time high monthly close at 77.18, at 70.68 and at the most recent high monthly close seen in July 1999 at 72.12. The last intra-month high was also seen in 1999 and it was at 74.00, suggesting that if that high is broken, the all-time intra-month high at 84.35 will be tested. As such, the 74.00 level will be used as the stop loss resistance for this trade. By the same token, since the stock has not been above that level for 15-years, the probabilities do not favor it being broken at this time, at least not before a strong correction occurs.

DD broke out last week of a 12-week sideways trading range between 65.38 and 68.81 that included a double top at 68.81 and 68.72. As such, the stock is likely to see some strong follow-through buying this week that could take the stock up this month to the last monthly high close at 72.12, which is going to be the desired entry point of this mention. By the same token, the stock should start running into resistance at 70.68 which would be high enough to fulfill the breakout requirements as well as reach a level of decent resistance. A decision whether to lower the desired entry point will be made after seeing the action this week.

To the downside, DD shows no support until 66.32. Further support will be found all the way down to the low seen the last 12 weeks at 65.38 but below that no support is found until the 50-week MA, currently at 61.90, is reached. By the same token, below 65.38 the stock shows no intra-week support until the $60 level is reached. The support at the $60 area is decent as it includes 2 previous intra-week highs and 2 previous intra-week lows, and all of consequence.

By the same token, the last strong correction seen in DD was in the "sell in May and go away" period and the stock corrected 23% at that time and the one in 2011, which is the one I believe the indexes are looking to mimic, was of 35%, suggesting that if this correction mimics either one of those the stock could drop down to either $54 or $47.

Sales of DD above 72.00 and using a stop loss at 74.35 and having a minimum correction down to the $60 level will offer a 5-1 risk/reward ratio. A correction down to $54 will offer a 7.5-1 risk/reward, and a correction down to $47 will offer a 10-1 risk/reward ratio. Even a sale of the stock around the 70.68 level and using the minimum objective of $60 will offer a 3.5-1 risk/reward ratio.

My rating on the trade is a 4.25 (on a scale of 1-5 with 5 being the highest).

OXY Friday Closing Price - 99.69

OXY generated an indicative 6 months period of time between 2011 and 2012 when the stock made an important low at 66.36 and an important high at 106.68. The 66.36 low was the bottom of the corrective period seen in the indexes from May to October and the 106.68 high was an important and successful retest of the 2 previous highs before that at 109.08 and the all-time high at 117.88.

Since that low in October 2011, OXY has been in a clearly defined multi-point uptrend channel having rallied to the top of the channel line on 4 occasions and to the bottom of the channel line of 4 occasions, meaning that the channel is dependable. The channel consists of a trading range of about $15-$19 between each high and low, also meaning that there is good profit to be made in simply trading the channel itself. The top of the channel line is presently at 103.50 and with the important February 2012 high resistance at 106.68, a short trade offers high probability and good risk/reward when using the bottom of the channel line at 88.00 as the downside objective. By the same token, the stock corrected 44% in the May to October 2011 period, suggesting that if the same kind of correction is to occur this year, that the downside objective would be $57.

OXY closed on the highs of the day/week/month on Friday and further upside is likely to be seen with the top of the channel line at 103.50 as the main objective. Nonetheless, the stock does show a minor to perhaps decent intra-week resistance at 101.65 that could stop the rally if the indexes show some weakness, meaning that the desired entry point will be 103.50 but if the action suggests a lower entry point into the trade, the 101.65 level will be considered. Either way, the 106.68 level is not likely to get broken unless the indexes continue aggressively to the upside.

To the downside, the closest support OXY shows is at 93.80 but that support is considered minor. Decent support is found at 91.20 that includes the 200-day MA, currently at 90.80. By the same token, the 200-week MA has been shredded consistently on both sides over the past 3 years, suggesting it will not work as an important support line at this time. Important and decent to strong support is found at the most recent spike low seen in February at 85.90, which is lower than the objective of the trade at 88.00. Nonetheless, the 85.90 support is pivotal because if broken, a drop down to the $57 level could become a real possibility.

OXY has traded the channel consistently over the past 3 years and that is all this mention expects to see. By the same token, if a major correction as not seen since 2011 is to occur, the trade could turn out to be a home run.

Sales of OXY between 103.25 and 103.50 and using a stop loss at 106.78 and having a downside objective of 88.00 will offer a 3.3-1 risk/reward ratio.

My rating on the trade is a 4 (on a scale of 1-5 with 5 being the highest).

STZ Friday Closing Price - 84.13

In August 2012 STZ broke out of a 10-year sideways trading range between $10 and $30 and in just 20 months has managed to almost triple in price up to the recent all-time high at 85.91. During the last 20 months, the stock has only had 2 corrections of consequence, with the first one happening at the very beginning of the run when the stock got up to $40 and corrected back down to the $30 level to retest the breakout. The second correction occurred in April when the stock made the all-time high and corrected back down to 76.26, meaning that a 12% correction occurred.

STZ closed on the highs of the day/week/month on Friday and further upside is likely to be seen above last month's high at 84.32. It is unclear yet whether the stock is resuming the uptrend or whether April's correction is a signal that a top has been found and that the rally this month will turn out to be just a retest of the high before a stronger correction occurs. Nonetheless, the fact the stock had a negative key reversal on the monthly chart in April (new all-time highs and a close below the previous month's low) does suggest the probabilities favor a top having been found and a stronger correction yet to come.

To the upside, STZ shows intra-week resistance at 84.33 and then stronger at the all-time high at 85.91. Nonetheless, it is interesting to note that the all-time high weekly close is 84.33 and that the bulls got up to 84.32 on Friday but were unable to generate a few more points to get the stock to close in a new all-time weekly closing high, much like the indexes did. The action does increase the probabilities that the stock is topping out and that this week's action will turn out to be a successful retest of the high once the stock goes intra-week above 84.32. It should be mentioned that the all-time high daily close is at 85.35, meaning that the stock can go higher and close higher during the week but what is important is the weekly close next Friday. A red close next Friday would build what could become a double top on the weekly chart at 84.33/84.13, which in turn would be a strong reason for the traders to take long-term profits.

To the downside, STZ shows minor support at 81.67 (which does include the 50-day MA, currently at 81.45) at 80.22 (which does include the 100-day MA, currently at 80.50) and at 76.26 (which is the low for the past 3 months). Further support is found at the gap area between 70.43 and 74.61 but if the monthly reversal low at 76.26 is broken, the probabilities would be high the gap would be closed, meaning that a full-blown correction is occurring. It should be mentioned that the previous all-time high made before the positive January earnings report came out was at 71.62. With the 200-day MA being currently at 72.00, a drop down to that level is highly likely to occur if 76.26 is broken. One additional chart factor to be mentioned is that the 50-week MA is currently at 69.00 and if the stock does get into a strong correction the 50-week MA would be a valid target.

The STZ mention is not a high probability trade for the simple reason that there was no follow through to the downside after April's negative key reversal, meaning that the reversal itself might have been "the correction" and that the uptrend is resuming. Nonetheless, the risk/reward ratio on this trade is very good and the fact the indexes are likely to get into a correction of consequence soon, does make this mention a "good risk" trade.

Sales of STZ between 84.40 and 85.40 and using a stop loss at 86.35 and having a downside objective of 72.00 will offer a risk/reward ratio of at least 6-1.

My rating on the trade is a 3.25 (on a scale of 1-5 with 5 being the highest).

WDC Friday Closing Price - 87.85

WDC is another stock that has had a meteoric climb over the past 30-months, having rallied from a low of 32.95 to April's high at 95.00 and almost in a straight up fashion. Nonetheless, the stock over the past 2 months has shown signs that a top may have been found and that a strong correction, perhaps as low as the previous all-time high at 47.44, could be seen.

WDC showed signs of weakness in April when it generated a negative reversal month, having made the new all-time high at 95.00 but then closing in the red and near the lows of the month. The stock saw follow through to the downside occur in May but after getting down to the low seen in February at 80.84, with a drop down to 80.78, the bulls were able to turn the stock around to close near the highs of the month, suggesting further upside above last month's high at 88.00 will be seen. The stock will show a double bottom on the monthly chart if the stock goes above 88.00 this month (highly likely), meaning that June could end up being either the resumption of the uptrend or simply a retest of the high before a stronger correction occurs.

To the upside, WDC shows no resistance until the $90 demilitarized zone is reached. Above 90.44, resistance is found at 91.91, at 92.75 and at the all-time high at 95.00. The stock over the past 6 days built a bullish flag formation on the daily chart that if 88.00 is broken, offers a 91.36 objective. The chart strongly suggests that a rally up to the $90 demilitarized zone will occur. Picking the best entry point thereafter will depend on the action seen but it is unlikely that the stock will get over, or even up to, the 92.75 level.

To the downside, WDC shows minor to decent support between 82.42 and 83.16 and then stronger support at the double low at 80.78-80.94. Further support is found at the 200-day MA, currently at 79.00. Additional support is found at the 50-week MA, currently at 76.80, and then nothing until the $60 level is reached, which is also where the 100-week MA is currently at.

WDC seems to be either resuming the uptrend or in the process of building a bearish Head & Shoulders formation with the question being where the right shoulder is going to be (likely to be around the $90 demilitarized zone). If an H&S formation is built and then broken (a break below 80.78), the objective would be the $67 level. Based on the "sell in May and go away" adage, the probabilities favor the stock heading lower after this rally.

Sales of WDC between 89.70 and 90.30 and using a stop loss at 92.85 and having a 67.00 objective will offer a 7-1 risk/reward ratio.

My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the highest).

Updates
Monthly & Yearly Portfolio Results
Closed Trades, Open Positions and Stop Loss Changes

Status of account for 2007: Profit of $9,758 per 100 shares after losses and commissions were subtracted.
Status of account for 2008: Profit of $14,704 per 100 shares after losses and commissions were subtracted.
Status of account for 2009: Profit of $7,523 per 100 shares after losses and commissions were subtracted.
Status of account for 2010: Profit of $24,045 per 100 shares after losses and commissions were subtracted.
Status of account for 2011: Profit of $3,616 per 100 shares after losses and commissions were subtracted.
Status of account for 2012: Profit of $3,399 per 100 shares after losses and commissions were subtracted.
Status of account for 2013: Profit of $15,886 per 100 shares after losses and commissions were subtracted.

Status of account for 2014, as of 4/1

Profit of $13766 using 100 shares per mention (after commissions & losses)

Closed out profitable trades for May per 100 shares per mention (after commission)

CVX (short) $169
AMZN (long) $921
AMZN (long) $954
NFLX (long) $254
FSLR (long) $1

Closed positions with increase in equity above last months close minus commissions.

DD (short) $77
ACOR (short) $271
AIG (short) $350

Total Profit for May, per 100 shares and after commissions $2997

Closed out losing trades for May per 100 shares of each mention (including commission)

MELI (long) $654
INTC (long) $21
AMZN (long) $29

Closed positions with decrease in equity below last months close plus commissions.

HAL (short) $23
DOW (short) $331
DIS (short) $81

Total Loss for May, per 100 shares, including commissions $1139

Open positions in profit per 100 shares per mention as of 5/31

CVX (short) $361
MELI (long) $665

Open positions with increase in equity above last months close.

FCEL (long) $21
ELON (long) $0

Total $1047

Open positions in loss per 100 shares per mention as of 5/31

ARNA (long) $35
EBAY (long) $108

Open positions with decrease in equity below last months close.

LINE (short) $53
PWRD (long) $8
SINA (long) $475
GIGM (long) $14
DCTH (long) $264

Total $957

Status of trades for month of May per 100 shares on each mention after losses and commission subtractions.

Profit of $1948

Status of account/portfolio for 2014, as of 5/31

Profit of $15714 using 100 shares traded per mention.



Updates on Held Stocks

ARNA generated another red weekly close on Friday, the 4th in a row, and closed on the lows of the week, suggesting further downside below last week's low at 6.10 will be seen this week. The stock also had a negative reversal day on Friday, having gone above Thursday's high and then closing below Thursday's low, also suggesting that the stock will be under sell pressure on Monday with 5.96-/6.00 as a likely objective. The 5.96/6.00 level of support is very important because if broken it would likely trigger new chart selling interest. The stock shows support from a double low at 5.85/5.88 and further support at 5.75 and at 5.42 but the probabilities do favor a domino-like reaction to the downside if the 5.96 level gets broken, with a target of 4.95 which is where the 200-week MA is currently at. To the upside, last week's high at 6.41 is likely to be resistance this week that if broken would renew some buying interest, especially since it would mean the 200-day MA, currently at 6.10, will have held up. A break above 6.75 would be a positive signal. Probabilities favor the bears this week with the bulls in a defensive stance.

CVX generated a new 7-week low weekly close on Friday suggesting that further downside down to $120 is likely to be seen. By the same token, the stock got down to the 100-day MA, currently at 121.80, and bounced with a green daily close and on the highs of the day on Friday, suggesting the first course of action this week should be to the upside. Resistance on the daily chart is found at 123.94 and it is pivotal resistance because the stock closed exactly in the middle of the week's trading range, leaving the door open for the bulls to generate some new buying interest if able to get above last week's high at 123.99. Further resistance is found at 124.41 that if broken would likely cause the stock to retest the gap between 125.50 and 125.76. A rally up to the gap area would be a short-term positive but if the gap is closed the bulls would gain an important edge. Probabilities favor the bears and a drop down to the 200-day MA, currently at 120.00, but this is likely a short-term pivotal week.

EBAY generated a red weekly close making the previous week's close at 52.02 into a successful retest of the 100-week MA, currently at 52.10. Nonetheless, the bulls were able to keep the stock above the important $50 level that has been consistent and reliable support since December 2012, suggesting that the traders are still unsure of what to do. A weekly close above 52.02 would be a positive, while a close below 49.89 a negative. The stock did generate a positive reversal day on Friday, having made a new 16-day low but then closing in the green and on the highs of the day, suggesting the first course of action for the week will be to the upside. In addition, Friday's low at 49.81 matches up with the low on May 7th at 49.77, making that a double low from which the bulls can feed off of. No resistance is found above until 52.08. Further resistance is found at 52.31 and at 52.48. A break above those resistance levels, as well as a close of the gap at 53.39 would be a strong positive. Stop loss can now be raised to 49.67.

ELON got a better than expected earnings report and spiked up to make a new 8-week intra-week high as well as a close above the 10-month weekly closing high at 2.49 that originally got broken in January and that caused the stock to move up to the 4.18 level this year. Nonetheless, the bulls were unable to maintain the early week rally and the stock closed near the lows of the week, suggesting that an intra-week drop below last week's low at 2.50 will occur this week. The stock did generate a small buy signal on Tuesday that does suggest that at least the stock has found a low to the recent downtrend but the failure to close near the highs of the week does suggest that the stock is likely going to trade sideways and not yet ready to move to the upside on a consistent basis. The 2.50 level is now an important support level on a daily and weekly closing basis and 2.48 on an intra-week basis. Daily close resistance is found at 2.67, at 2.83 and at 3.03. A weekly close above 2.75 would be a buy signal on the weekly chart. Probabilities slightly favor the bulls but mostly for a sideways trading range between 2.55 and 3.05 for the next few weeks and/or couple of months.

FCEL had a positive week after an upgrade was given by Stifel with a 2.90 objective. The stock closed above the 2.31 level on Friday that was a level that had been weekly close resistance for 46 months and that when broken in March generated a rally up to 4.74. The stock closed near the highs of the week and further upside above last week's high at 2.48 is expected to be seen this week. The stock gapped up between 2.24 and 2.26 after the upgrade was given and the first course of action this week is likely to be a retest of that gap. Nonetheless, the stock had a low of 2.28 on Friday and did close in the middle of Friday's trading range, meaning that if the stock gets above Friday's high at 2.41 on Monday, that the retest of the gap will have been successful. With the gap having come off of a fundamental piece of news, the probabilities of it getting closed are low. Daily close resistance is found at 2.44 and a bit stronger at 2.54. A weekly close above 2.45 would be another buy signal that would offer a weekly close rally to 3.18. By the same token, a weekly close above 2.45 would suggest an intra-week rally up to at least 3.53. Important intra-week support is now found at 2.21. Probabilities favor the bulls.

GIGM confirmed that a double low at 1.00 now is in place after the stock generated a green weekly close and rallied above the previous week's high at 1.06. The stock closed on the highs of the week and further upside above last week's high at 1.13 is likely to be seen this week. The bulls were unable to close above the 200-day MA, currently at 1.11, so there are still question marks about the validity of the rally this past week. Nonetheless, the probabilities do suggest the stock will continue to rally up to the next but more important resistance level at 1.20. A couple of closes above the 200-day MA would give the bulls added ammunition to generate some additional new buying but the stock does need to close above 1.20, both on a daily and weekly closing basis, to generate stronger interest. A close above 1.20 would suggest a rally up to the 1.65 level. Any drop back down to 1.00 would be considered a negative.

LINE did generate a new 10-week weekly closing high on Friday, above the previous high at 29.02. The stock closed on the highs of the week and further upside up to the 30.00-30.82 level is likely to be seen. Intra-week resistance is found at 29.23/29.30 that needs to be broken in order for the stock to continue higher. If the bulls fail to break above that resistance level this week, the disappointment will be palpable. By the same token, if able to break above 29.30, the probabilities will be very high that at least 30.00, if not 30.69, will be reached. As such, I will be covering the short positions if 29.30 is broken but will continue to have interest in the short side above 30.60. A break below the previous week's low at 27.96 would now be strongly bearish.

MELI received an upgrade from JPM with a $104 objective and the stock rallied intra-week 7.6% in value. Nonetheless, the bulls were unable to maintain the initial rally, allowing the stock to fall back to close in the lower half of the week's trading range and leaving the door open for a drop below last week's low at 81.78. The recent low at 79.54 has not yet been tested and a drop down to 80.44 could be seen this week that would likely fulfill the chart for a more consistent rally thereafter. By the same token, the weakness at the end of the week might have only been to fill the gap between 84.10 and 84.42 (dropped on Friday to 83.88) that was generated after the upgrade. Further intra-week support is found at 83.53, at 82.08 and at 80.44. The upgrade by a knowledgeable firm such as JPM does suggest the downtrend is over and with the stock not being overly sensitive to the stock indexes, the probabilities favor a strong rally after whatever retesting needs to be done this week. On a weekly closing basis, the 87.60 level is important as that is where the 200-week MA is currently located. A close above that 87.60 next Friday, especially if the stock closes above the most recent high weekly close at 89.12, would suggest a rally up to the $100 level. A break below the most recent low at 79.54 would be strongly negative.

PWRD continued its upward climb with a new 3-week intra-week and weekly closing high. The stock closed on the highs of the week and further upside above last week's high at 18.61 is likely to be seen. Resistance will be found between 19.25 and 19.87, which includes the 50-week and 200-day MA's, both currently at 19.50. Any rally and close above the top of the $20 demilitarized zone at 20.30 would be strongly positive. Nonetheless, it is unlikely that will happen unless the indexes continue strongly higher. The 200-day MA is likely to be the pivot point and deciding factor. A close above 20.30 will likely bring about a rally up to 23.00. I am planning to take profits on the trade between 19.50 and 20.00.

SINA ended up having a negative week, having closed below the previous weekly closing low from April 2013 at 46.25. The stock closed on the lows of the week and further downside below last week's low at 44.63 is likely to be seen this week. On a possible positive note though, the stock still closed above the July 2012 weekly closing low at 44.55 and the negative week could end up simply being the required retest of the recent intra-week low at 42.40 before embarking on a short-covering rally. The stock is strongly oversold after generating the 6th red weekly close in a row and the 9th out of the last 10. With all the negative news already out, if the bulls are able to get below last week's low but not break 42.40, and in turn generate a green close next Friday, then the stock will be ready to retest the $50 level. Resistance is found at 47.60 and at 49.75. Probabilities still favor the bears.


1) ELON - Averaged long at 5.534 (4 mentions). No stop loss at present. Stock closed on Friday at 2.59.

2) ARNA - Purchased at 6.50. Stop loss at 5.75. Stock closed on Friday at 6.15.

3) FCEL - Averaged long at 2.276 (3 mentions). No stop loss at this time. Stock closed on Friday at 2.34

4) EBAY - Purchased at 51.81. Stop loss at 49.67. Stock closed on Friday at 50.73.

5) MELI - Purchased at 82.80. Averaged long at 82.85 (3 mentions). No stop loss at present. Stock closed on Friday at 85.07.

6) LINE - Shorted at 28.75. Mental stop at 30.35. Stock closed on Friday at 29.02.

7) GIGM - Averaged long at 1.225 (2 mentions). No stop loss at present. Stock closed on Friday at 1.10.

8) DOW - Covered short at 51.08. Averaged short at 49.58. Loss on the trade of $310 per 100 shares (2 mentions) plus commissions.

9) CVX - Shorted at 126.40. Stop loss at 127.93. Stock closed on Friday at 123.37.

10) AMZN - Liquidated at 309.57. Purchased at 299.89. Profit on the trade of $968 per 100 shares minus commissions.

11) FSLR - Liquidated at 59.84. Purchased at 59.69. Profit on the trade of $15 per 100 shares minus commissions.


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Disclaimer

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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