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Issue #522 
Apr 9, 2017 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Failure Signals Given. Bulls Lose Their Edge!
DOW Friday closing price - 20656
The DOW generated a negative reversal week after a positive reversal week, which means that the buying interest seen the previous week was not strong enough to see follow through on a weekly closing basis. It should be noted that since the uptrend began in 2008 there has only been "one" other positive reversal followed by a negative one and though on that occasion (2011) the index did see buying the following week and a rally back up to the previous 3-year high at 12876 with a rally up to 12573, the ultimate result was a correction of 19.2% over the following 15 weeks. As such, it can be thought that the positive/negative reversal week is a sign that the bulls have run out of the necessary ammunition with which to make a new high and that a strong correction is on the horizon.
The DOW closed in the lower half of the week's trading range, suggesting further downside below last week's low at 20517 will be seen this week. If that occurs, last week's high at 20887 will become a spike up retest of the all-time high at 21169 and that might be the only sign the traders need to start a strong profit taking binge.
To the upside and on an intra-week basis, the DOW now shows minor to perhaps decent resistance at 20887 and again at 21000. Above that level, there is decent resistance at 21169.
To the downside and on an intra-week basis, the DOW now shows minor support last week's low at 20517 and then minor to perhaps decent at 20,412. Below that level, there is nothing until the 20000 demilitarized zone (19970-20030) is reached. Further support is found at 19831 and minor to perhaps decent as well as pivotal at 19784.
The DOW generated a spike up on Wednesday after the ADP Employment Change number came in much better than anticipated but it turned out to be a negative reversal day with the index coming down to close in the red and generating a 248 point trading range (second highest negative drop of 2017). On Friday, the Jobs report negated the positive ADP number, having come in much lower than anticipated and though the reaction was not as negative to the downside as the ADP number was to the upside, it does suggest that the bears will be in control of the index this week, especially considering that there are no important economic reports due out.
The DOW traders will be largely depending on the charts this week (due to the lack of news scheduled) and there are 2 levels to watch. To the upside, the 20737-20757 area is considered pivotal resistance as it held the bulls at bay on 3 occasions for past 13 days. To the downside, the recent low at 20412 is short-term pivotal support as a break of that would cause the 20000 level to be a magnet, especially since there is no establish support below. The 20517 level will likely be the pivot point that gives the traders a clue whether to test resistance or support first.
Probabilities favor the bears in the DOW as there doesn't seem to be any compelling reasons to purchase stocks this week.
SPX Friday closing price - 2362
The SPX generated a negative reversal week and a close in the lower half of the week's trading range, suggesting further downside below last week's low at 2344 will be seen this week. In addition, the red weekly close made the previous week's close at 2362 into a second successful retest of the all-time high weekly close at 2383, which in turn gives the bears additional ammunition.
The SPX finds itself in the lower half of last month's trading range (2322-2400) and given that last month was a negative reversal month and that the possibly catalytic economic reports for the month are mostly out, the probabilities now favor the bulls going below last month's low this month.
To the upside and on an intra-week basis, the SPX now shows minor resistance at 2378, minor to perhaps decent at 2390 and decent at 2400.
To the downside and on an intra-week basis, the SPX shows minor support at 2348, minor but short-term pivotal at 2344, minor again at 2336 and decent as well as pivotal at 2322. Below that level, there is no support until minor support at 2285 and likely short-term pivotal at 2267/2271. On a daily closing basis though, important support will be found at 2298.
The SPX now shows a bearish spike that was created on Wednesday off of the better than expected ADP Employment Change report and that now gives the bears an edge they did not have last week. With no economic reports of consequence scheduled this week and the Senate going on recess for the next 11 days, the traders are likely to key on the charts for trading during this period of time. As such, the probabilities favor the index heading lower with the 2288-2300 level as the objective.
NASDAQ Friday closing price - 5911
The NASDAQ generated a negative reversal week, having made a new all-time intra-week high at 5936 and then turning around to close in the red and in the lower half of the week's trading range, suggesting further downside below last week's low at 5855 will be seen this week.
This is the second negative reversal seen in the NASDAQ the past 3 weeks and it strongly suggests that the bulls are running out of ammunition, especially since the expanding triangle that has been built over the past 12 weeks should have generated additional strong buying and a positive weekly close follow through on Friday.
To the upside and on an intra-week basis, the NASDAQ now shows minor resistance at 5911, minor to decent resistance at 5928 and decent at 5336. Above that level there is no resistance until the 6000 demilitarized zone is reached and that is only psychological resistance.
To the downside and on an intra-week basis, the NASDAQ now shows very minor support at 5826, minor to perhaps decent at 5812 and at 5800 and decent at 5769/5781.
The NASDAQ bulls are not likely to get any help from economic news this week and the failure seen this past week will give the bears ammunition to push lower. There is a very high probability of a drop down to at least 5800-5812 this coming week, which is drop of about 1.2%-1.6%. By the same token, a trading range between 5911 and 5812 is a plausible scenario.
The bulls did not receive the necessary fundamental support this past week to keep the buying interest strong and failure signals were given. With the Senate on recess for the next 12 days and no economic reports of consequence scheduled during this period of time, it seems the bears will have a measure of control with the big question being "how much?"
On the other side of the coin, the earnings quarter starts this week on Thursday with C, WFC, and JPM reporting earnings. The first 3 weeks of the earnings quarter tend to favor the bulls, meaning that whatever selling is seen this week is likely to be somewhat limited.
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Stock Analysis/Evaluation
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CHART Outlooks
There are no new mentions this week. I had some problems this week that prevented me from doing chart evaluations. By the same token, with this being a shortened week (Good Friday), no economic news of consequence scheduled, and the Senate in recess, it is unlikely that any stock will trend strongly in any direction.
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Updates
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| Updates on Held Stocks |
Closed Trades, Open Positions and Stop Loss Changes |
| ARNA continued to trade in the sideways trading range between 1.34 and 1.70 that the stock has been in for the past 5 months. Nonetheless, the stock closed on the lows of the week and trading only 7 points above support, meaning the bears will have a decent chance to make a statement this coming week. A rally above the minor intra-week resistance at 1.49 would change the bearish bias. Probabilities favor the bears. CCJ has now traded for 7 weeks between 10.55 and 11.38, meaning the traders have no clear direction at this time. Nonetheless, the stock closed near the highs of the week at 11.16 and given that there are now 5 intra-week highs between 11.30 and 11.38, the probabilities favor the bulls. The chart does suggest though, that a break of resistance or support will generate a move of anywhere between $.80 cents and $1.00 in whatever direction is chosen. Probabilities favor the bulls this week. CLF, like with the indexes, generated a negative reversal week after a positive one, suggesting that the bears will be in control this week. The stock closed on the lows of the week and further downside below last week's low at 8.04 is expected to be seen this week. Objective is the 200-day MA, currently at 7.78. Pivotal short-term support is found at 7.70 that if broken would suggest the stock will head down to the next at 7.00. The chart requires a daily close above 8.61 to take the sell pressure off. Probabilities favor the bears this week with the only question being whether the 200-day MA will be broken or not. CNX made a new 9-week high and closed near the highs of the week, suggesting further upside above last week's high at 17.51 will be seen this week. The 200-day MA is currently at 17.75 and that line is likely to be seen this week. A rally above 17.85 in conjunction with a daily close above the MA line would be a decent short-term positive. Intra-week support is found at 16.58 and a bit stronger at 16.13. Nonetheless, the bulls must maintain the weekly close above 16.44 to keep the buying interest alive. Probabilities favor the bulls this week but only on a limited basis. ENG generated an uneventful inside week and a close just slightly below the midpoint of the week's trading range. The bears still have minor control of the short-term trend but with the 200-day and 200-week MA having been tested successfully on a couple of occasions over the past 3 weeks, the bulls still maintain slight control over the midterm trend. There is minor intra-week resistance at 1.95 minor to perhaps decent weekly close resistance at 2.00. The stock now shows a confirmed successful retest of the 200-day MA, currently at 1.72, but further confirmation is needed with a break above 1.94/1.95 to bring in new buying interest. History suggests that a rally to retest the recent high at 3.10 is likely to be seen. Pivotal intra-week support is now found at 1.62. Probabilities very slightly favor the bulls this week. FCEL made a new 4-week high and closed on the highs of the week, suggesting further upside above last week's high at 1.60 is expected to be seen. The stock likely rallied on the coattails of PLUG that got a very lucrative contract from Amazon and doubled in price because of it. Intra-week resistance is found at 1.80 and at 1.85 and then nothing until 2.30. Intra-week support is found at 1.50. Probabilities favor the bulls this week. FSLR got down to the 4-year minor support at 25.66 with a drop this past week to 25.56. The stock bounced up enough to close in the upper half of the week's trading range, suggesting further upside above last week's high at 27.65 will be seen this week. The stock is showing 6 weeks in a row of red closes as well as a 34% drop in price, suggesting that the bears might be in for a small amount of short-covering. Based on the mini rally seen in April 2013, the upside objective of the short-covering rally is likely to be the 29.71 level. Minor intra-week support and resistance is found at last week's high and low (25.56 and 27.65). A break of either will likely generate about a $1.50 move in that direction. Probabilities slightly favor the bulls this week. LVLT generated a new 9-week intra-week high and a new 10-week high weekly close. The stock also generated a buy signal, having closed above the most recent high weekly close at 57.47. The stock closed near the highs of the week and further upside above last week's high at 59.12 is expected to be seen. The bulls are now committed to either making a new 9-year high above the high seen 14-weeks ago at 60.12 or this being the required retest of that high before a short-term downtrend begins. If a new high above 60.12 is seen, the upside objective would be the $67 level, which was the original objective of the mention. Nonetheless, any failure at this time would suggest that the $50 level would be visited with perhaps even a drop down to the 200-week MA, currently at $45. Last week's low at 56.92 is now pivotal support, meaning that a stop loss should now be placed at 56.65. Probabilities favor the bulls. X confirmed the positive reversal seen the previous week with higher highs and a green weekly close. The stock closed near the highs of the week and further upside above last week's high at 34.77 is expected to be seen this week. Minor intra-week resistance is found at 34.77 and then at 35.30. Above 35.30 there is open air until 37.41. The stock now has a confirmed double low at 30.71/30.73 and minor short-term pivotal support at 31.95. The chart seems to suggest that the bulls have gained their edge back and that a strong rally up to the $37 level could be seen this week. XON generated a new 30-month intra-week low but the bulls were able to rally the stock at the end of the day on Friday to prevent a new 30-month weekly closing low from occurring. Additionally and on a decent positive note, the stock now shows a confirmed double bottom on the daily closing chart at 18.93/18.92, having closed at 18.92 on Wednesday, followed by 2 green closes on Thursday and Friday. The stock closed slightly in the lower half of the week's trading range which would normally suggest further downside below last week's low at 18.41 but with the double bottom on the daily closing chart and having closed near the highs of the day on Friday, suggesting the first course of action for the week will be to the upside above Friday's high at 19.24, the probabilities favor the bulls instead of the bears. Minor intra-week resistance is found at 19.65 that if broken would give the bulls added ammunition. A daily close above 20.23 would give the bulls a new buy signal.
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1) FCEL - Averaged long at 2.2275 (4 mentions). No stop loss at present. Stock closed on Friday at .133 (new price 1.60). 2) CCJ - Averaged long at 10.47 (2 mentions). Stop loss at 9.65. Stock closed on Friday at 11.16. 3) ENG - Averaged long at 1.865 (4 mentions). No stop loss at present. Stock closed on Friday at 1.78. 4) ARNA - Averaged long at 3.725 (4 mentions). No stop loss at present. Stock closed on Friday at 1.41. 5) MT - Liquidated at 8.49. Averaged long at 6.244. Profit of $1123 per 100 shares (5 mentions) minus commissions. 6) FSLR - Averaged long at 37.52 (3 mentions). No stop loss at present. Stock closed on Friday at 26.81. 7) LVLT - Purchased at 59.11. Stop loss now at 55.15. Stock closed on Friday at 58.54. 8) CLF - Averaged long at 8.96 (3 mentions). No stop loss at present. Stock closed on Friday at 8.11. 9) CNX - Averaged long at 19.17 (3 mentions). Stop loss now at 14.66. Stock closed on Friday at 16.78. 10) X - Purchased at 32.01. Averaged long at 33.42 (3 mentions). Stop loss now at 30.65. Stock closed on Friday at 33.90. 11) FSLR - Purchased at 25.67. Stop loss at 24.36. Stock closed on Friday at 26.81. 12) XON - Purchased at 18.57. Stop loss now at 18.31. Stock closed on Friday at 19.22. 13) CLB - Covered shorts at 114.46. Shorted at 115.52. Profit on the trade of $106 per 100 shares minus commissions.
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