Issue #470
March 13, 2016
The Oasis

Newsletter


The newsletter with chart analysis for stocks and stock indexes

Stock Indexes Analysis/Evaluation


Important Economic and Chart Week Ahead! Mid-term Decisions Likely.

DOW Friday closing price - 17213

The DOW extended its recent recovery, having generated the 4th green weekly close in a row and coming within 1.1% of the high of the year at 17405 (seen on January 4th). The index closed on the highs of the week, suggesting further upside above last week's high at 17220 will be seen this week, suggesting that all of the year's losses could be erased this coming week if the index rallies another 192 points from Friday's close.

In addition, the DOW also closed on Friday above the 200-day MA, currently at 17155, also suggesting that the weakness seen the past 49 trading days has been erased as the line was last broken to the downside on December 31st. If confirmed by a second close in a row on Monday, the break of the line would authenticate the January low at 15450 as a bottom that would only be at risk of being broken if the fundamental picture changes dramatically to the negative.

On the other side of the coin and purely on a technical chart basis, the DOW is facing a strong negative event in the form of crossover of the 50-week MA, currently at 17295, under the 100-week MA, currently at 17260, which has only happened twice in the past 20 years and both times it occurred (December 2000 and July 2008) the index got into a prolonged downtrend that lasted 18 months and 3589 points in the year 2000 and 7 months and 5265 points in 2008. The crossover is due to occur within 3 weeks and only a major rally above 17295 over that period of time would offer any chance of cross not occurring (probabilities of the cross occurring are about 95%).

It is evident that the chart traders in the DOW are aware of this negative and are furiously working toward attempting to negate the cross. Nonetheless, both the 50 and 100 week MA's have proven to be hard lines to break by themselves over the past 20 years and the fact the index has not even gotten up to the lines does make it very difficult for the bulls to accomplish getting above them at this time.

To the upside and on an intra-week basis, the DOW will show minor to decent resistance at 17350 and again at the gap area between 17405 and 17421. On a weekly closing basis, resistance is minor to decent at 17279.

To the downside and on an intra-week basis, the DOW shows minor but possibly short-term indicative support at Friday's low at 17014. Below that level, decent and certainly short-term pivotal support is found at last week's low at 16821.

It is likely that on Monday the DOW will continue higher as the bulls attempt to reach the upside objectives before the economic reports due out this week come out. After Tuesday, much will depend on the reports, especially on Wednesday when the FOMC rate decision is announced.

The probabilities favor the bears in the DOW this week, at least as far as where the indexes close next Friday. The index is now presently overbought and at levels of resistance of consequence and the fundamental picture is not likely to improve enough to give the bulls the kind of additional ammunition they need to take the indexes much higher.

NASDAQ Friday closing price - 4748

The NASDAQ continued to underperform the other indexes, having rallied only .07% compared to 1.2% and 1.3% for the others. The lack of leadership of the index has to be considered a recurring negative this year as the NASDAQ was the leader the previous 8 years. Nonetheless, the bulls were able to close above the 100-week MA, currently at 4720, and if another green close occurs next Friday, it will be a confirmed break of a line that has been pivotal in the past and could be the catalyst that generates new buying interest and renewed leadership.

The NASDAQ did close on the highs of the week and further upside above last week's high at 4748 is expected to be seen but it does need to be mentioned that the index did the same the previous week and only went 2 points above the previous week's high, suggesting that the buying interest is strongly limited and likely seen only because the other indexes showed strength and carried the index higher.

To the upside and on an intra-week basis, the NASDAQ shows very minor resistance at 4785, minor to decent at 4814, and minor again at 4836 and 4862. On a daily closing basis using the chart for the last 52 weeks, minor to decent resistance is found at 4828 and decent at 4893, which is strengthened by the fact the 200-day MA is currently at 4880.

To the downside and on an intra-week basis, the NASDAQ shows minor to decent but also short-term pivotal support between 4614 and 4607. Below that level, there is very minor support at 4557 and then minor to decent at 4487.

The bulls in the NASDAQ did not accomplish very much this past week as they were not even able to even get close to the gap up between 4788 and 4804 that is a meaningless gap. In addition, the next level of decent resistance that needs to be broken for further upside of consequence to occur is up at 4814 and that is still 1.4% away from Friday's close, suggesting that the bulls in the index need a positive catalyst to accomplish even that small goal.

The big goal that needs to be accomplished by the bulls in the NASDAQ is to close the weekly gap between 4926 and 4999 that has been in place since the first week of January. As long as that gap remains unclosed, the bulls will be at risk of a downtrend beginning that would cause new lows to be made at some point in the near future. Nonetheless, closing the gap is likely to require strong fundamental positives as the bulls would have to break resistance levels of long-term importance, such as both the 50 and 100 week MA, currently at 4900 and 4730 respectively, as well as the 200-day MA, currently at 4890.

The 50 and 100 week MA are strong lines in the NASDAQ and just like with the other 2 indexes, the lines seem to be on a path to cross sometime in the next 5 months, meaning that the bulls must attempt to get way above the lines (likely resume the uptrend) in order to prevent such a cross from occurring. The probabilities do not favor such an occurrence, especially after such a weak showing this past week when the other indexes accomplished much more. It does seem the bulls are fighting a battle that is unlikely to be won.

It is evident though, that the bulls in the NASDAQ have an easy path to the upside this week for at least a rally up to the 4814 level, at least based on the chart and the fact that the index closed above the 100-week MA on Friday. If they fail to accomplish that goal it will be indicative. Probabilities favor the bulls but with big question marks.

SPX Friday closing price - 2022

The SPX bulls were successful in closing the index above the important 100-week MA, currently at 2014, and closing on the highs of the week, suggesting that further upside above last week's high at 2022 will be seen this week. With the 50-week MA, currently at 2033, likely to be reached this week, it is evident the bulls are trying to make a statement of consequence, given the importance that those 2 lines have had on the index for the past 20 years.

In addition, the SPX was able to close convincingly above the 1994 - 2010 level of weekly close resistance that has been pivotal and substantial since August 2014, meaning that now the bulls have been able to establish a decided edge and one that if confirmed with another close above 2010 next Friday would likely be meaningful for the longer term.

To the upside and on an intra-week basis, the SPX shows minor resistance at the gap area between 2038 and 2043 and then nothing until minor to decent but definitely pivotal resistance at 2081. On a weekly closing basis, minor resistance is found at 2053 and minor to decent at but pivotal at 2061.

To the downside and on an intra-week basis, the SPX shows minor to decent, as well as pivotal support, at 1969. Below that level, there is no support until minor as well as short term pivotal support is found at 1931. Further support is found between 1896 and 1904.

The SPX closed above the 200-day MA, currently at 2020, and if confirmed on Monday with another close above that level, as well as closure of the gap between 2038 and 2043, would negate all the weakness seen this year since the first trading day in January and put the index back to where it was in December. As such, closure of the gap will be the main target of the traders this week, especially given that there is no intra-week resistance until the gap is reached. By the same token, failure to close the gap this week will be seen as a decent negative.

In looking at the charts of the SPX and considering the importance of the weekly MA's, it is evident that some decisions are for at least the mid-term will be made this week.

Like with the DOW, the SPX is also looking at a negative cross of the 50-week under the 100-week MA's but unlike the other index, the cross is not imminent given that it is not due to occur for another 7-8 weeks. As such, the bulls are likely to key on the SPX in an attempt to negate the cross by rallying the index far above the lines, especially since it is presently the most important and indicative index. With no important intra-week resistance until 2081 is reached, the bulls have a higher possibility of negating the cross than the bulls do in the DOW.

Probabilities favor the bulls in the SPX this week.


The indexes remain in a rally mode but the order of importance among the indexes has changed, meaning that the NAZ is no longer the index to watch. Overall, that has to be considered a negative as Blue Chip and Financial stocks do have less upside potential than the Tech industry.

This coming week seems to be a decisive one, given that the indexes are reaching important and pivotal resistance levels and that a slew of important economic data is scheduled to be released (Retail Sales, PPI, CPI, Housing Starts, Building Permits, Industrial Production, Capacity Utilization, Philadelphia Fed and Michigan Sentiment). More importantly, the FOMC rate decision will be announced on Wednesday and there is a chance (though small) that another rate hike will occur, which in turn would likely stop the rally in its tracks.

In addition, oil has been a major factor in the recent rally seen in the indexes and oil is reaching a level of resistance at $40 that will be difficult to break. As such, the probabilities are very high that the traders will make some short-to-mid-term decisions this week.

Stock Analysis/Evaluation
CHART Outlooks

The indexes are reaching levels that will be very difficult to break, suggesting that sales at these levels offer much less risk, better probabilities and more profit than purchases. More importantly the resistance levels are clearly defined and of decent strength, requiring positive fundamental news to overcome.

All mentions this week are sales.

SALES

AMT Friday Closing Price - 98.46

AMT has been trading sideways between $85 and $102 for the past 23 months (since April 2014) and having closed on the high of the week last week, is likely to get close to the $102 level this coming week, suggesting a sale is the best strategy.

AMT successfully tested the 200-week MA in February, currently at 85.20, with an intra-week drop to 83.07 and a weekly close at 85.67 and for the past 4 weeks the stock has seen a positive bounce, having generated 4 green weekly closes in a row, as well as a $15.59 rally (15.8%). Nonetheless, the 83.07 low was a 22-month low and it has not yet been tested successfully, meaning that upon reaching the upside resistance between $100 and $102, the probabilities favor a downside move to retest the recent low.

To the upside and on an intra-week basis, AMT shows minor resistance at 99.59 and decent between 100.80 and 101.88. Further and stronger resistance is found at 104.12 (102.23 on a weekly closing basis) which was the successful retest of the all-time high made in November 2014 at 106.23.

To the downside and on an intra-week basis, AMT shows minor support at 95.58 and at 93.77 and minor to perhaps decent between 91.99 and 92.88 that if broken would open the door for a drop down to the $90 demilitarized zone. Further and decent support is found between 86.21 and 86.83 which will be the objective of this sale.

AMT generated a death cross the previous week when the 50-week MA crossed below the 100-week MA. The last time this cross occurred to the downside was in 2008 and at that time the cross caused the stock to fall 46% over a period of 5 weeks. With the stock now overbought, at a strong level of resistance, the recent lows not having been tested, and the death cross occurring, the short trade offers a high probability of success.

AMT closed on the highs of the week on Friday and further upside above 98.56 is likely to occur. There is an extremely high probability of the stock getting up to at least the $100 demilitarized zone this week, if not all the way into the decent area of resistance between 100.80 and 101.88.

Sales of AMT between 99.69 and 101.87 and using a stop loss at 103.35 and having an 86.83 objective will offer a 4-1 risk/reward ratio.

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

AA Friday Closing Price - 9.52

AA made a new 6-year low in January at 6.17, partly due to the sell interest seen in commodities. Nonetheless, the stock started to recover after the company stated that they believed that an aluminum deficit (rather than a glut) was going to happen. Recently, the stock has rallied together with the commodity rally, causing the stock to get up to 10.07, which is a 39% rally in price from the low.

Nonetheless, AA has now reached a level of resistance at $10 that is not only psychological but based on 4 previous failed attempts to get above the level since July of last year.

AA has moved straight up for the past 9 weeks since the low at 6.17 was made, having had higher lows each and every week and not yet having generated any retest of the low. With the stock now at a decent resistance level and commodities starting to show a pause in the recent uptrend, the probabilities of a retest of the low is high. The short trade offers a clear risk/reward ratio as well as a decent probability rating.

It should also be mentioned that 50-week MA, currently at 10.15, has proven to be a good indicator of short-to-mid-term trend for AA since 2008, having been indicative of support or resistance on 16 occasions during that period of time. The line was seen this past week when the stock got up to 10.07 and the reaction was a fall back in spite of the rally in the market. The line may be tested again this week but if the indexes do top out this week, it could be the best opportunity to short the stock, looking for the retest of the low.

To the upside and on an intra-week basis, AA shows dcent resistance between 10.07 and 10.23. Above that level, resistance is also decent, as well as pivotal at 11.18, which is the 8-month high as well as where the 200-week MA is currently at.

To the downside and on an intra-week basis, AA shows minor support at 9.12 and minor to perhaps decent at 7.81. Further support is found at 7.11 and then nothing until the recent low at 6.17.

The chart of AA suggests that a drop down to 7.81/7.99 is a high probability if for no other reason that some form of retest of the low is likely to occur. By the same token, it must be stated that the 6.17 low did not have a previously built support and at the time it was expected that the stock would drop down to the $5, meaning that if the 7.81 level of support breaks, it could open the door for a drop below 6.17 and down to 5.00. Either way, if a good entry point into the short trade is accomplished, a drop down to 7.81 will still be a decent profit.

Sales of AA between 9.92 and 10.23 and using a stop loss at 10.35 and having a 7.81 objective will offer a 5-1 risk/reward ratio.

My rating on the trading is a 3 (on a scale of 1-5 with 5 being the highest).

PHM Friday Closing Price - 18.40

PHM is a homebuilder whose stock broke the 200-week MA in early December, in spite of the building industry improving and the indexes rallying at the end of the year, suggesting that the uptrend was over before the market "took it on the chin" in January. It should be noted that the 200-week MA has been a "great" indicator of trend in the stock for the past 20 years.

PHM got back up to the 200-week MA, currently at 18.50, with last week's rally up to 18.44 and closed on the highs of the week, suggesting that further upside above that level will be seen this week. Nonetheless, with the indexes likely to reach a top this coming week and the MA being such a great indicator of trend, the probabilities do not favor the stock breaking the line, at least not on a closing basis.

To the upside and on an intra-week basis, PHM does not show any resistance until minor up at 19.51 and decent and well as pivotal at 19.81. Nonetheless, on a daily closing basis, resistance is found at the 200-day MA, currently at 18.85, and on a weekly closing basis at the 200-week MA, currently at 18.50.

To the downside and on an intra-week basis, PHM shows minor but likely short-term pivotal support at 17.08. Below that level, there is minor support at 16.56 and then nothing until the $15 demilitarized zone. Below that level, there is strong and pivotal support at 14.25 and then nothing until $10.

It is evident based on the long term success of the 200-week MA being support or resistance that the bulls will need positive fundamental news to break the line, especially considering that the line was broken to the downside without any help from the indexes or from news. The company does not report earnings for another 2 weeks and even then the last report was better than expected and it did not affect the stock at all, meaning that earnings may not be what the stock needs.

PHM fell down in January to test the 44-month intra-week low at 14.23 with a drop down to 14.61 and when that support level held, as well as the indexes started to rally, the stock got into a short-covering rally that got back up to the 200-week MA last week.

PHM made a new 13-week high last week and closed on the highs of the week, suggesting further upside above last week's high at 18.44 is likely to be seen, at least on a intra-week basis. By the same token, the 200-day MA is currently at 18.85 and it is likely that one or both of the MA's lines will hold the stock down and prevent further upside from occurring.

To the downside, PHM is at the very least likely to test the recent low at 14.61 with a drop down to the $15 demilitarized zone but given that the stock was weak when the indexes were not, the possibilities do exist that the 44-month low at 14.23 will break and that $10 become the objective.

Sales of PHM between 18.50 and 18.80 and using a stop loss at 19.61 and having a 15.00 objective will offer a 3.5-1 risk/reward ratio.

My rating on the trade is a 3.5 (on a scale of 1-5 with 5 being the highest).

Updates
Updates on Held Stocks
Closed Trades, Open Positions and Stop Loss Changes

ADSK extended its recent 4-week rally with another green weekly close but the gain was limited to only 36 points above the previous week's close and the gap between 58.67 and 58.95 was not closed, having gotten up to 58.34 and then falling back. The action seen suggests the buying interest is starting to ebb and/or the gap is generating selling interest. The stock closed just slightly above the mid-point of the week's trading range, meaning that the bulls may have trouble getting above last week's high at 58.34. Minor but likely pivotal intra-week support is found at 54.57 that if broken would push the stock down to at least the 200-day MA, currently at 52.30. A break of that line would be a decent negative. Probabilities still slightly favor the bulls but only for a minor rally above last week's high at 58.34.

ARNA continued to "spin its wheels", having generated a rally above last week's high but then making a new multi-year low weekly close at 1.50, which was only a new low by 1 point but not a new low intra-week. For the past 5 weeks, the stock has traded in a narrow trading range between 16 and 24 points and without any direction, suggesting the traders are waiting for news to break the deadlock. Support remains at 1.30/1.32 and resistance at 1.76. Nonetheless, a break above 1.63 or below 1.35 will probably be indicative of new strength in either direction. Probabilities favor more of the same.

CLB extended its recent rally, having made a new 19-week high weekly close on Friday and closing very close to the 9-month high weekly close at 120.05 that if broken would suggest the 200-week MA, currently at 136.00 would then be tested. The stock closed near the highs of the week and further upside above last week's high at 118.87 will be seen this week. Intra-week resistance is decent between 118.78 and 120.91 that is unlikely to be broken unless oil closes firmly above the $40 level. The stock gapped up on Friday between 115.62 and 116.01 that will be a magnet for closure all week, meaning that even though the bulls have the edge right now, they will still need help from oil and the indexes. Probabilities favor higher highs than last week (probably to the $120 demilitarized zone) but also some weakness, with the 50-week MA, currently at 112.20, as a possible and perhaps even likely objective.

DOW generated a positive reversal week, having gone below the previous week's low and then closing above the previous weeks' high. The stock closed on the highs of the week and further upside above last week's high at 50.81 is expected to be seen. Closure of the gap up at 51.28 will be the objective of the bulls this week. By the same token, failure to close the gap on Monday would be considered a potential negative. Support is now found at 48.45 that includes the 200-day MA, currently at 48.30. If the stock can break and close below both of those levels it would be a signal that the rally has ended. Probabilities favor the bulls.

ENG generated a negative reversal week, having made a new 14-week intra-week high but then closing in the red and in the lower half of the week's trading range, suggesting further downside below last week's low at 1.01 will be seen this week. On a positive note, the bulls have been able to get established above the 200-day MA, currently at 1.10, having closed above the line for the past 6 days in a row, meaning that if they can continue doing that this week that the selling interest will go away. Intra-week resistance remains between 1.24 and 1.30 and support at the .97-1.00 level Probabilities slightly favor the bulls.

FCEL generated a negative reversal week, having made a new 13-week high and then turning around to close in the red and near the lows of the week, suggesting further downside below last week's low at 6.10 will be seen this week. On a positive note though, the bears failed to negate the weekly close break to the upside of the 6.16 level, suggesting the weakness being seen is likely temporary. The weakness seen this week was not unexpected as the stock got up slightly above the January high at 7.05 (got up to 7.10) as well as to the 100-day MA, currently at 7.10, meaning there were clear chart reasons for technical selling interest to emerge at that level. The 6.16 level on both a daily and weekly closing basis, remain short-term pivotal and if the stock does get below last week's low at 6.10 but the bears cannot generate a close daily close below 6.16, the buying interest will likely return.

FSLR generated a new 18-month high weekly close on Friday, above the previous one seen 3 weeks ago at 70.25. The stock closed on the highs of the week, suggesting further upside above last week's high at 70.56 is expected to be seen. By the same token, the stock has not come close to getting above the recent intra-week high at 73.71 in spite of the rally in the indexes the past 2 weeks, suggesting that this rally could end up being the required retest of that high before a correction back down to the $60 occurs. Minor intra-week resistance is found at 71.21 and a bit stronger at 72.12. It is expected that the stock will get up to 72.12 but consideration should be given to liquidating the positions there. Support is now found at 66.58 that if broken would likely bring about a new round of selling.

GPS generated a new 23-week intra-week and weekly closing high on Friday and the stock closed on the highs of the week, suggesting further upside above last week's high at 30.31 will be seen this week. Nonetheless, the bulls were unable to close above the 3-year weekly closing low at 30.43 that got broken in January, meaning that the only thing the bulls have been able to accomplish so far is getting back up to resistance. The stock has moved up 27% over the past 4 weeks since the successful retest at 22.03 of the multi-year low seen in January at 21.57. Nonetheless, if the bulls are unable to generate any follow through of consequence at this level, another retest of the recent lows is likely to occur. Intra-week support is found between 24.55 and 25.02. Probabilities favor the bulls at the beginning of the week but the bears at the end of the week.

LVS generated an inside week and a red close but the bulls were able to bounce off of the 50-week MA, currently at 48.75 (low for the week was 48.75) to close near the highs of the week, suggesting further upside above last week's high at 51.96 will be seen this week. Minor intra-week resistance is found at 52.14 and decent as well as pivotal resistance at 53.25. Probabilities favor the stock getting up to 52.14 but if this move back up is simply to be the required retest of the 7-month high at 53.25 and the bulls fails to get above 53.25 and the gap up at 54.04 is not closed for the second time in a row, it will be seen as a strong negative that would likely generate new selling interest. Probabilities slightly favor the bears.

T extended its recent gains, having made a new 35-month high at 38.55 but the bulls were still unable to make a new all-time intra-week high above 39.00 or a new all-time high weekly closing high above 38.59. The bulls have now had 7 days in a row of getting above the 38.00 level without being able to challenge the all-time high at 39.00, meaning that there is strong selling interest here. The stock closed in the middle of the week's trading range, suggesting the traders will look to the indexes for direction. Nonetheless, unless the bulls can get the stock above 39.00 and generate a daily close above 39.00 or a weekly close above 38.59, the probabilities will favor the bears. Minor but likely short-term pivotal support is found at 37.61. Important and also pivotal weekly close support is found at 36.12.


1) FCEL - Averaged long at 2.227 (4 mentions). No stop loss at present. Stock closed on Friday at 6.36.

2) ENG - Averaged long at 1.92 (3 mentions). No stop loss at present. Stock closed on Friday at 1.10.

3) FSLR - Averaged long at 58.506 (5 mentions). No stop loss at present. Stock closed on Friday at 70.32.

4) AREX - Liquidated at 2.00. Averaged long at 6.013. Loss on the trade of $1204 per 100 shares (3 mentions) plus commissions.

5) ARNA - Averaged long at 3.725 (4 mentions). No stop loss at present. Stock closed on Friday at 1.50.

6) T - Shorted at 38.52 Stop loss at 39.35. Stock closed on Friday at 38.36.

7) GPS - shored at 30.27. No stop loss at present. Stock closed on Friday at 30.17.

8 ADSK - Averaged short at 55.895 (2 mentions). No stop loss at present. Stock closed on Friday at 56.61.

9) CLB - Averaged short at 114.07 (2 mentions). Stop loss presently at 121.01. Stock closed on Friday at 117.42.

10) LVS - Averaged short at 50.76 (2 mentions). No stop loss at present. Stock closed on Friday at 51.58.

11) DOW - Shorted at 50.35. Stop loss at 51.28. Stock closed on Friday at 50.62.

12) CLB - Shorted at 115.75. Covered shorts at 116.76. Loss on the trade of $101 per 100 shares plus 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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