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Issue #557 
February 4, 2017 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Correction Continues, Now at 10%+
DOW Friday closing price - 24190
The indexes are now in the biggest correction seen since November 2015 with the DOW having fallen 12.3%, the SPX having fallen 9% and the NASDAQ having fallen 11.7% over the past 3 weeks. The indexes all closed on the lower half of the week's trading range, suggesting further downside below last week's lows will be seen this week (DOW below 23360, SPX below 2533 and NAZ below 6833).
Nonetheless, buying interest was seen on Friday with all the indexes generating a positive reversal on the daily chart and a 4% recovery action from the lows of the day that suggests the first course of action for the week will be to the upside above Friday's highs (DOW above 24382, SPX above 2638 and NASDAQ above 6917). More importantly, the SPX, which is seen as the leading index, got down to the 200 day MA, currently at 2540, which is a line that has not been touched since November 2016 (15 months) and from which it is expected that a recovery of consequence will occur given that there has not been any change of the fundamental picture so far to support the indexes being in a downtrend (compared to a correction) and/or going much further down. The DOW also came close to the MA line, given that it is at 22800 and the index got down to 23360 and the NASDAQ got down to 6630 and the line is at 6560.
As far as economic reports this coming week, there is nothing of consequence until CPI and Retail Sales come out Wednesday. One of the reasons for the correction is the feeling that the Fed will be a bit more aggressive this year is hiking interest rates, especially if there is a spike up in inflation, and more will be known about that on Wednesday. The bounce seen on Friday, especially in the SPX from the 200-day MA, will likely give the bulls some confidence in buying at the beginning of the week but that could change on Wednesday if the CPI comes in higher than the present expectations at 4%. As such, it is expected the indexes will rally at the beginning of the week but be susceptible for a new sell off after Wednesday, suggesting that if lower lows than last week are seen this week that they will happen after midweek.
To the upside and on an intraweek basis, the DOW shows very minor resistance at 24534 and at 24876 and then likely decent and pivotal at 25293. The SPX shows very minor resistance at 2565 and at 2593 and then likely decent and pivotal at 2727. The NASDAQ shows very minor resistance at 6914 and at 7003 and the likely decent and pivotal at 7170.
To the downside and on an intraweek basis, the DOW shows minor to perhaps decent support between 23242 and last week's low at 23360. Below that, the 200-day MA is currently at 22800 but it is not support by any other previous low. The SPX shows minor to perhaps decent support at last week's low at 2533 and then a bit stronger at 2488. On a daily closing basis though, the support is decent at 2540. The NASDAQ shows minor to decent support between last week's low at 6630 and 6667 and then a bit stronger at the 6500 demilitarized zone. On a daily closing basis though, support is decent at the 200-day MA, currently at 6560.
Though the probabilities are high that the indexes will stage further recovery at the beginning of the week, the action for the week is still "up in the air" as to whether further downside will be seen or not. The charts of the DOW and NASDAQ are not yet fulfilled as the 200-day MA have not been reached. The SPX has been the index that shows the smallest correction (9% vs 11.7% and 12.3%) and that suggests that even if the index makes a new low below last week's low at 2533 that it will be limited.
The key to the upside this week are the pivotal resistance levels I mentioned above (DOW at 25293, SPX at 2727 and NAZ at 7170). If those levels are broken the bulls will regain a strong edge, at least for a retest of the recent all-time highs. As long as those levels are not broken, the indexes will be at risk of going below last week's lows at some point this week. Wednesday's economic reports seem to be the pivot news for this week.
Probabilities at this time favor the bulls at the beginning of the week but the bears at the end of the week.
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Stock Analysis/Evaluation
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CHART Outlooks
The market volatility has increased strongly and it is likely to continue, meaning that the market is now in a phase where "trading" stocks is likely to be the most beneficial. For the beginning of the week, purchases should be made if desired entry points are reached. Nonetheless, desired entry points are unlikely to be seen at the beginning of the week, meaning that waiting for later on in the week is likely to occur.
By the same token, the market is changing wildly almost every day, meaning that changes may have to be made "on the run" and if so, they will be made on the message board.
The mentions this week are the ones that I purchased last week but got stopped out of. The desired entry points will be below those where I exited the trades.
PURCHASES
AAPL Friday Closing Price - 156.41
AAPL gave a short-term sell signal 2 weeks ago when it generated a weekly close below 169.23 and that sell signal was confirmed last week with another red weekly close. Nonetheless, the stock only fell 2.5% in price last week (based on weekly closes) and compared to the 5% drop seen in the indexes, it can be said the stock found stronger support at the lows than what the indexes found, suggesting a higher chance of a rally being seen this week than in the indexes.
In spite of the short-term sell signal given in AAPL, the stock remains in a long term uptrend and that was proven this past week when the stock saw a low of 150.24 and not breaking another and more important intraweek pivotal support at 149.16 and then bouncing to close in the middle of the week's trading range (unlike the indexes), suggesting as good a chance of going above last week's high at 163.88 as below last week's low. Simply stated, the stock chart suggests it is a buy this week on any dip down close to last week's low.
The upside objective of the trade is the weekly close support level at 169.26 that got broken and gave the recent sell signal. A rally back up to the level would be seen originally as a needed retest of the breakdown point, if and when the stock is either now in a sideways trading range or perhaps starting a downtrend. Nonetheless, fundamentally the company remains bullish long term suggesting that a downtrend will not occur.
To the upside and on an intraweek basis, AAPL shows minor resistance at 160.87, and then minor to perhaps decent but likely short-term pivotal between 163.72 and 164.94. Above that level, there is minor resistance at 172.62 and then decent between 175.50 and 176.24.
To the downside and on an intraweek basis, AAPL shows important and pivotal support at 149.16. On the intraday chart, support is found at 154.00 and minor at 151.72.
On a negative note, AAPL broke the 200-day MA, currently at 160.00 on Thursday and confirmed the break on Friday. On the other side of the coin, the stock generated a positive reversal day on Friday and a close near the highs of the day, suggesting further upside will be seen on Monday above Friday's high at 157.89 that is likely to become at least a retest of the break, meaning that if the stock can get down to the desired entry point at 154.00 on Monday that at least a $6 rally upward will be seen.
Purchases of AAPL below 154.10 and using a stop loss at 149.06 and having a 175.00 intraweek objective will offer a 4-1 risk/reward ratio.
My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the highest).
BEN Friday Closing Price - 38.22
BEN generated a sell signal on the weekly chart this past week, suggesting that the uptrend is over but likely meaning the stock is now in a sideways trend until such a time that the indexes are over their correction and have begun a new uptrend.
BEN closed in the lower half of the week's trading range and further downside below last week's low at 37.01 is expected to be seen. Nonetheless, the stock shows an important intraweek spike low from September 2015 at 36.09 which should not be broken given that on a weekly closing basis the stock generated a breakout in November of 2016 above a weekly closing price of 36.82, suggesting that the area between $36 and $37 has to be considered a decent to strong support area and from which a recovery rally will occur.
To the downside and on an intraweek basis, BEN is showing a possible double bottom at 37.01 and 37.06 as those were the lows seen on Tuesday and Friday and if the stock gets above Friday's high at 38.69 on Monday, it will be a double bottom. Below that level, there is no support until decent support at 36.09 is reached.
To the upside and on an intraweek basis, BEN shows pivotal resistance at 40.33 and then nothing of consequence until the 42.00-42.50 level is reached. Above 42.50 there is no resistance until 44.35 is reached and that is considered decent resistance as well as the mention's objective given that the 200-week MA is currently at 44.45.
The big question this week is whether BEN will go below the double bottom and down to 36.09 or not. The stock is likely to rally at the beginning of the week up to the 40.00 level but such a rally should not be chased. As such, it will likely be toward the end of the week and depending on what the indexes are doing that the answer will become clear.
Purchases of BEN between 36.09 and 37.39 and using a stop loss at 35.90 and having an objective of 44.35 will offer at least a 4-1 risk/reward ratio.
My rating on the trade is a 3.5 (on a scale of 1-5 with 5 being the highest).
EBAY Friday Closing Price - 41.66
EBAY generated 4 weeks ago a breakout above the 200-week MA, a line the stock had been trading below since July 2015. The breakout was then confirmed 2 weeks ago with a better than expected earnings report that caused the stock to rally up to 46.99. Nonetheless, with the weakness seen in the index market, the bulls have been unable to continue the uptrend and on Thursday the breakaway gap that was created after the earnings report got closed.
EBAY closed in the lower half of the week's trading range, suggesting further downside below last week's low at 40.43 will be seen this week. With the breakaway gap closed, the probabilities now favor the stock heading down to retest the 200-week MA, currently at 39.00, as a new supporting factor for stimulating a rally back up to the recent high at 46.99 or even perhaps to the original upside objective of the first mention, which was the $50 level.
To the upside and on an intraweek basis, EBAY shows very minor resistance at 43.12 and then nothing until 46.99. Above that level, resistance is decent between $50 and $50.93.
To the downside and on an intraweek basis, EBAY shows minor support at 40.18 and then nothing of consequence until 37.38. On a daily closing basis though, the 2 previous high daily closes at 38.99 and at 39.80 are decent support levels.
Purchases of EBAY between 39.89 and 38.81 and using a stop loss at 37.28 and having a $50 objective will offer a 4-1 risk/reward ratio.
My rating on the trade is a 3.25 (on a scale of 1-5 with 5 being the highest).
FSLR Friday Closing Price - 61.22
FSLR generated a sell signal on the weekly closing chart 2 weeks ago when the stock broke through the weekly close support at 67.52, suggesting that the uptrend is temporarily over and that a sideways trend is now likely in place.
FSLR closed in the lower half of the week's trading range, suggesting further downside below last week's low at 58.80 will be seen this week. Nonetheless, the stock generated a positive reversal day on Friday, having made a new 9-week low and then closing in the green and in the upper half of the day's trading range, suggesting the first course of action for the week will be to the upside above Friday's high at 62.57 will be seen on Monday. The positive reversal from an area of minor support at 58.77 suggests there is buying interest at that level.
FSLR remains in an uptrend that will not be broken until the support at 56.13 gets broken, meaning that dips will still generate buying interest.
To the upside and on an intraweek basis, FSLR shows minor resistance at 63.10 and then nothing until minor at 68.37, minor to decent between 71.17 and 71.80. On a daily closing basis though, resistance will be found 67.52 as that was the level of support that got broken that brought about the drop down to 58.80.
To the downside and on an intraweek basis, FSLR shows minor support at 58.77 and then decent and pivotal at 56.13. On a daily closing basis though, support is decent and pivotal at 57.27.
FSLR remains in a long-term uptrend but is likely in a sideways trend for the next 2-3 months between $59 and $72. As such, dips below $59 should be bought. The question this week, much like the same question the indexes are facing, is whether the stock will drop below last week's low or not. That won't likely be known until after Wednesday's economic reports. Nonetheless, a drop down to at least the 59.25-59.70 level is likely to be seen either way.
Purchases of FSLR below 59.71 and using a stop loss at 56.03 and having a 72.00 objective will offer a 4-1 risk/reward ratio.
My rating on the trade is a 3.5 (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 |
| ARNA generated an uneventful week in spite of the chaos that occurred in the index market. The stock generated another green weekly close but still below the 30-month high weekly close at 40.84 that occurred 6 weeks ago. The stock closed in the upper half of the week's trading range suggesting further upside above last week's high at 40.85 will be this week. On a positive note though, the stock now shows 2 successful retests of the 33.03 low seen on January 16th and that likely means the chart is fulfilled and that resumption of the uptrend is ready to start. Short-term pivotal support is now found at Friday's low at 36.88. Probabilities favor the bulls. BHTG generated a positive reversal, having made a new 5-week low and then closing in the green and in the upper half of the week's trading range, suggesting further upside above last week's high at 5.14 will be seen this week. The stock did get down to the 4.55-4.75 intraweek support that I mentioned last week with a low at 4.60 and that suggests that after a small dip back down to perhaps 4.85 or even 4.75 that the chart will be fulfilled for the bulls to attempt to renew the uptrend that was seen in July of last year. The bullish flag remains in place and now a break above 5.30 is likely to generate new buying. A break of the flag formation will offer a 6.20 upside objective. Support is now decent and pivotal at 4.60. Probabilities favor the bulls. CCJ reported earnings on Friday and though the report came in slightly better than expected the reaction was negative after an opening rally, likely due to the index market generating a strong down day in the morning. The stock generated a break of minor to perhaps decent short-term support at 8.95 and fell all the way down to 8.34 (close to the important weekly close support at 8.30) before any buying was seen. The break of short-term supports does subtract form the previously supported and bullish chart outlook but does not negate it as the bears were unable to get below the previous intraweek spike low at 7.68 or generate a weekly close below 8.30. The stock did close in the lower half of the week's trading range, suggesting further downside below last week's low at 8.34 will be seen this week. Nonetheless, the chart remains longer term bullish and with no negative changes to the fundamental picture, it is likely that some recovery will be seen this week. Daily close resistance is found at 9.00 and short-term pivotal at 9.26. Minor intraweek resistance is now found at 9.76. If the bears are unable to take the stock below last week's low at 8.34, recovery could be swift this week. Pivot point for the week is 9.00. Any daily close above that level will likely negate last week's weakness. Any daily close below 8.07 would be strongly bearish. Probabilities slightly favor the bulls this week. CLF generated a positive reversal week, having made a new 9-week low and then closing in the green. The stock did close in the lower half of the week's trading range, suggesting a slightly higher probability of going below last week's low at 6.30 than above last week's high at 7.23 but the stock did close near the highs of the day on Friday and the first course of action for the week is likely to be to the upside and above Friday's high at 6.77 and if that occurs, Friday's low will become a double bottom using the low seen 2/6 at 6.31. Such a double bottom at a level of chart importance for the stock should be a strong positive. Minor resistance is found at 7.08 and pivotal at 7.23. A rally above 7.23 and a close above the 200-day MA, currently at 6.97 would be a new and decently strong buy signal that would likely generate new buying interest. The 2-point uptrend line that started 3 years ago at 1.20 is currently at 6.12, meaning that level could be seen but should not be broken. On a weekly closing basis though, that line is presently at 6.48, meaning that Friday's green weekly close has now made the line a 3-point line that should give additional and strong support to the uptrend. Probabilities favor the bulls. CPG made a new 7-week low and closed in the lower half of the week's trading range, suggesting further downside below last week's low at 6.65 will be seen this week. The stock broke a decent support area that showed 3 previous spike lows between 6.90 and 6.97, which did weaken the chart. Nonetheless, the fact that the index market was strongly weak and that oil took a fall below $60 was the likely reason for the break of support. The stock did recover a bit on Friday to close near the highs of the day, suggesting further upside above Friday's high at 7.08 will be seen on Monday. If that occurs, some of the selling pressure will be relieved. Nonetheless and on a daily closing basis, the bulls need to generate a daily close above 7.33 to negate the negative action seen last week. If the bulls are unable to do that in the first couple of days of the week, the selling pressure will likely come back and last week's lows would then be at risk of being broken. The stock does have an important double bottom at 6.46/6.42 and if last week's low is broken, the double bottom would be at risk of being broken as well, which would be a strong negative. Probabilities very slightly favor the bulls. ENG generated a new 5-year low weekly close on Friday and the stock closed on the lows of the week, suggesting further downside below last week's close at .75 will be seen this week. The break of the weekly close support at .77 was only by 1 point and the bears were unable to break the intraweek support at .73, meaning that the action seen last week probably had more to do with the weakness seen in the overall market than in the stock itself. Nonetheless, the stock did generate a negative reversal on the daily chart on Friday and will be facing technical selling interest at the beginning of the week, meaning that if follow through to the downside is seen and the November low at .73 is broken, the only thing that would then possibly stop the slide would be the 2013 low at .68. It is evident that the bears continue to have the edge but with the stock now trading within a $.25 cent trading range for the past 14 weeks, it is unlikely such a break will occur now, at least not until the earnings report comes out on March 8th. Short-term pivotal resistance is now found at .82, slightly stronger at .92 and pivotal longer term at 1.00. Probabilities slightly favor the bears this week. FCEL made a new 5-month intraweek low this week, having broken intraweek the important and pivotal support at 1.50, as well as the 200-day MA, currently at 1.58. Nonetheless, the break was negated the following day when the stock generated a spike up rally to 1.75 and a close above the MA line once again, meaning that the break of support was not confirmed. It is likely the break of support occurred because of the weakness in the index market. The stock closed in the upper half of the week's trading range, suggesting further upside above last week's high at 1.75 will be seen this week. With the stock now showing a second successful retest of the MA and negating an intraweek break, it is likely that the bulls will now regain control once again and that the stock will move back up to at least the highs seen recently. Short-term pivotal resistance is found at 1.75 and then nothing of consequence until 1.93 and 1.99. Support is now strongly pivotal at 1.45. Probabilities favor the bulls. GCI made a new 10-week low as the stock mimicked the index market fall, having fallen 16.5% in value over the past 3 weeks. Nonetheless, the stock did reverse at the end of the week to close unchanged on the weekly closing chart but near the highs of the week, suggesting further upside above last week's high at 11.25 will be seen this week. The bullish flag that was in place did suffer some damage but remains viable though the upside objective of the flag changed from 15.94 to 15.34. Resistance is found at 11.66, at 11.84m at 12.09 and pivotal at 12.37. Support is found at 10.75 and pivotal at 10.30. Probabilities favor the bulls. MNK made a new all-time low and closed on the lows of the week, suggesting further downside below last week's low at 15.27 is likely to be seen. The stock definitely reacted to the negative action in the indexes but failed to generate any kind of recovery on Friday when the indexes reversed to the upside, suggesting that any further weakness in the index market will additionally affect the stock to the downside and any rally in the indexes will only help the stock marginally. Several companies do have the stock rated a hold but have offered a $21 to $23 upside objective which based on the chart is doable if the index market rallies. Short-term pivotal resistance is now found at 17.62. Probabilities continue to favor the bears. RENN made a new 5-month low this past week and in the process closed below the 200-day MA, currently at 8.54 (closed at 8.45). The stock closed near the lows of the week, suggesting further downside below last week's low at 8.02 will be seen this week. Nonetheless, the stock did generate some buying interest on Friday when the indexes rallied and closed near the highs of the day, suggesting the first course of action for the week will be to the upside above Friday's high at 8.75 will be seen on Monday. To the upside, there is minor to perhaps decent resistance at 8.83 and then short-term pivotal at 9.20 that if broken would suggest the worst is over. The bulls need to negate the break of the 200-day MA this week and confirm the negation or the bears will gain additional ammunition. The stock has fallen 57% from the highs seen just 6 weeks ago and 33% from the highs seen before the app announcement, suggesting the downside is way overdone since there has not been "any change" in the fundamental picture of the company. To the downside, there is important and decent support at 7.55. Probabilities very slightly favor the bulls this week. SLCA confirmed the sell signal given the previous week on the weekly closing chart with another red weekly close. The stock closed near the lows of the week, suggesting further downside below last week's low at 27.78 will be seen this week. Nonetheless, the stock generated a positive reversal on the daily chart on Friday, having made a new 11-week low but then closing in the green and near the highs of the day, suggesting further upside above Friday's high at 29.47 will be seen on Monday. The positive reversal on Friday and holding of the important and longer term pivotal support between 27.42 and 27.56 does suggest that the stock may now be in a sideways mode between 28.50 and 35.85 (based on weekly closes) until such a time that oil resumes its uptrend (probably 1-3 months). Resistance is found at the $30 demilitarized zone (29.70-30.30) that if broken would suggest the worst is over and that the stock will recover to at least 32.60 where the 200-day MA is currently at. If the bulls are unable to do that by mid-week, last week's lows will probably be tested and likely broken. Probabilities slightly favor the bulls this week.
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1) FCEL - Averaged long at 2.2275 (4 mentions). No stop loss at present. Stock closed on Friday at .138 (new price 1.65). 2) ENG - Averaged long at 1.764 (5 mentions). No stop loss at present. Stock closed on Friday at .76. 3) ARNA - Averaged long at 3.725 (4 mentions). Stop loss now at 2.94. Stock closed on Friday at 3.975 (new price (39.75). 4) CLF - Averaged long at 7.786 (5 mentions). No stop loss at present. Stock closed on Friday at 6.62. 5) RENN - Purchased at 11.08. No stop loss at this time. Stock closed on Friday at 8.45. 6) CCJ - Averaged long at 9.585 (2 mentions). No stop loss at present. Stock closed on Friday at 8.53. 7) MNK - Averaged long at 25.165 (2 mentions). No stop loss at present. Stock closed on Friday at 16.02. 9) BGTH - Purchased at 5.07. No stop loss at present. Stock closed on Friday at 4.99. 10) ARNA - Averaged long at 29.093 (3 mentions). Stop loss now at 32.50. Stock closed on Friday at 39.75. 11) CPG - Purchased at 7.11 and at 6.89. Averaged long at 7.00. No stop loss at present. Stock closed on Friday at 6.92. 12) GCI - Purchased at 11.02. Averaged long at 11.175. Stop loss now at 10.20. Stock closed on Friday at 11.15. 13) FCEL - Purchased at 1.60. Stop loss at 1.40. Stock closed on Friday at 1.65. 14) WDC - Liquidated at 84.65. Averaged long at 82.555. Profit on the trade of $419 per 100 shares (2 mentions) minus commissions. 15) COF - Shorted at 101.85. Averaged short at 103.19. Covered shorts at 93.53. Profit of $1933 per 100 shares (2 mentions) minus commissions. 16) WMT - Shorted at 105.91. Covered shorts at 98.27. Profit on the trade of $764 per 100 shares minus commissions. 17) FSLR - Purchased at 62.36. Liquidated at 62.48. Loss on the trade of $78 per 100 shares plus commissions. 18) MNK - Averaged long at 42.733. Liquidated at 18.19. Loss on the trade of $7363 per 100 shares (3 mentions) plus commissions. 19) EBAY - Purchased at 42.62 and at 42.63. Liquidated at 41.65. Loss on the trade of $195 per 100 shares plus commissions. 20) SLCA - Liquidated at 32.40. Purchased at 32.96. Loss on the trade of $56 per 100 shares plus commissions. 21) RENN - Purchased at 9.91. Liquidated at 8.87. Loss on the trade of $104 per 100 shares plus commissions. 22) BEN - Purchased at 39.07. Liquidated at 38.37. Loss on the trade of $70 per 100 shares plus commissions. 23) AAPL - Purchased at 159.38. Liquidated at 157.99. Loss on the trade of $139 per 100 shares plus commissions. 24) SLCA - Purchased at 28.56 and at 27.84. Averaged long at 28.20. Stop loss at 27.32. Stock closed on Friday at 29.20.
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The opinions and commentaries by Mr. De Vito are not a recommendation to buy or sell, but rather
a charting guideline, based on his own knowledge and experience, regarding the stocks he is following or
that are brought to him by others. Mr. De Vito does not presently offer a track record of his trading experiences.
No inference of success and/or failure should be assumed. The
information enclosed above, regarding his background, length of trading, and experience, is correct
but is not meant to suggest, state, or infer any future success in trading, based on his opinions. The information herewith included should only be used by investors who are aware of the risk inherent in securities trading. Mr. De Vito accepts no liability whatsoever for any loss arising from any use of the information and/or comments he supplies. |
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