Issue #597 ![]() Dec 30, 2018 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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Bounce Generated. Bottom Found, or Just a Short-term Correction?
DOW Friday closing price - 23062
All the indexes generated positive reversal weeks, having made a new lows for the year and then turning around to close in the green and near the highs of the week, suggesting further upside above last week's highs will be seen this week (DOW at 23381, SPX at 2520, NAZ at 6684). The positive reversal does suggest that the indexes will start the year on an up note.
Nonetheless and unless the indexes can rally strongly on Monday (more than 3% - unlikely), the indexes will close in the lower half of the month's trading range suggesting that further downside below last month's lows (DOW at 21712, SPX at 2346 and NAZ at 6190) will be seen in January. This scenario, of course, is based on there being no change in the fundamental picture of Interest rates, Trade War, and even the Government shutdown not resolved soon. As such, the probabilities favor the indexes rallying at the beginning of the month but then seeing new selling interest come in.
The main reason for the rally is likely to be technical inasmuch as the SPX reached the 200-week MA, currently at 2348, with a drop down to 2346. The 200-week MA is an established guideline for long term trends and given that there has not "yet" been any long term fundamental damage done or at least not seen as such, it is highly unlikely that such a line will be broken, or broken for long or by much. It is also likely that a strong bounce from that line would be seen, suggesting that was the catalyst for the rally. By the same token, only the SPX got down to the line, suggesting that the same thing is likely to occur to the DOW and the NASDAQ or at least to one of those indexes. In the DOW, the 200-week MA is currently at 20693, and in the NAZ it is at 5943.
Given that a rally did occur and that the indexes are likely to start the year on a positive note, the upside objectives are clear, inasmuch as all indexes broke the weekly close support for the year the previous week and given that the reason for the rally is mostly technical, the upside objectives will be a retest of the weekly close levels that got broken. Such a retest would give the traders a clue as to whether this rally is to continue and the worst is now behind, or whether further downside is to come. In the DOW the weekly close support that got broken is at 23533, in the SPX it is at 2588 and in the NASDAQ it is at 6874.
To the upside and on an intraweek basis, the DOW show minor resistance at 24057 and then nothing until minor to decent resistance at 24858. The SPX shows minor resistance at 2585 and then nothing until 2685. The NASDAQ shows minor resistance at 6868 and then nothing until 7197.
To the downside and on an intraweek basis, the DOW shows no support until the 20-month low seen last week at 21712. The SPX shows minor support at 2417 and at 2405 and then nothing until last week's low at 2346. The NASDAQ shows very minor support at 6582 and then nothing until last week's low at 6190.
As you can see by the lack of support or resistance of consequence anywhere nearby and the large trading ranges between them, the indexes are likely to remain volatile, especially to any news. Nonetheless, there is not likely to be any "unexpected" news the first week of the year, meaning that for now and because of the 3-day rally, the bulls will have the edge, at least until the weekly close resistance levels are reached. Even then, those resistance levels are on a weekly closing basis, meaning that intraweek those levels can be easily broken. The ISM Index does come out January 3rd and the Jobs Report on January 4th but the traders have not been keying on those reports of late, suggesting they are not likely to be catalytic. Earnings report for the quarter start coming out on January 14th and those could generate some movement as questions about the health of the economy have been part of the down movement. Earnings reports could turn the selling around.
As such and unless some news comes out about the Trade Way and/or the Fed plan for 2019, the bulls are likely to have a slight edge at least through mid-month. After that, the earnings reports will take center stage.
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Stock Analysis/Evaluation
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CHART Outlooks
There are no mentions in this week's newsletter as there is no conviction yet on any midterm direction. As such, only day trades or very short term trades can be considered and those will only come up as the trading occurs. As such, mentions may be given throughout the week on the message board but only for short-term trades.
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Updates
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Updates on Held Stocks |
Closed Trades, Open Positions and Stop Loss Changes |
ARNA generated a positive reversal week, having made a new 6-week low and then turning around to close in the green and near the highs of the week, suggesting further upside above last week's high at 39,58 will be seen this week. The same scenario as with the indexes is seen in the stock, suggesting a rally up to resistance and then the traders waiting for news. Intraweek resistance is found at 42.83 and then pivotal at 43.85. Pivotal support is found at last week's low at 35.04. Probabilities favor the stock trading between 36.80 and 42.83 for the next week or two or until something is decided in the index market. CCJ generated a positive reversal week, having made a new 8-week low and then turning around to close in the green and near the highs of the week, suggesting further upside above last week's high at 11.15 will be seen this week. Like the indexes and many stocks, the chart suggests that the traders are waiting for news. On a positive note, the stock remains above the 200-day MA, currently at 10.89, and at the 200-week MA, currently at 11.25, which means the stock is more leaning to the bulls than the bears. As such, it will require negative action by the indexes to cause further downside. Intraweek resistance is found at 11.67 and at 11.96. Pivotal resistance is found at 12.29 that if broken would likely give the bulls the needed ammunition for a breakout. Support is now pivotal at last week's low at 10.61. CLB generated a positive reversal week, having made a new 9-year 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 60.98 will be seen this week. Very minor intraweek resistance is found at 63.26 but that resistance is also 9 years old, suggesting that it is not dependable. One has to go all the way back to 2007-2008 to find a clearer chart picture with minor to decent intraweek support at 57.76 and decent to perhaps strong at 51.04 and decent intraweek resistance at 73.24 and decent to perhaps strong at 77.77. The areas of resistance and support are 11 years old and not likely to be closely respected but it is evident that the stock is now in an area where buying interest will automatically be found, especially considering that oil seems to have found support at this time and should move up to the $50-$51 level. On that old chart, resistance starts at 64.96 so it seems likely the traders will be targeting that area as the first upside objective. For the past 6 days the stock has traded between 56.72 and 60.98, meaning that selling interest has somewhat abated. A break above last week's high will likely bring in some bargain basement and short-covering interest. Probabilities favor the bulls this week. CLF generated a positive reversal week, having made a new 8-month 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 8.03 will be seen this week. The green weekly close, made the previous week's close at 7.68 into a successful retest of a pivotal level of resistance that was seen July and October 2017. That level proved to be pivotal on several occasions during that period of time and from which rallies up to the 8.68 level of weekly close resistance occurred. The chart suggests that the probabilities now favor the stock trading between 7.60 and 8.60 for the next few weeks or until new news comes out. There are 2 levels of resistance on the daily closing chart that have some pivotal meaning. The first is at 8.20. A daily close above that level will generate a failure signal against the bulls, meaning the selling pressure would likely abate. The second daily close resistance area is at 9.00. A close above that level would suggest the bulls have the edge once again. There is no pivotal daily close support area as there is support from 7.00 all the way up to Monday's close at 7.57. Probabilities favor the stock being in a trading range for the next few weeks or until new news comes out. CRON generated a positive reversal week, having made a new 3-week low and then closing in the green and near the highs of the week, suggesting further upside above last week's high at 10.67 will be seen this week. Chart suggests the stock could be heading up to the 13.00-13.39 area of resistance while the market figures out what is happening to the economy and where the indexes will head to in January. Last week's low at 9.56 is now a pivotal area of short-term support. Nonetheless, below that area the 200-day MA is currently at 8.17 and based on the merger news, that level is not likely to be broken even if the indexes make new lows in January. For the following 2 weeks, the stock is likely to have a slight upward bias. ENG made a new 5+-year intraweek low at .52 that destroyed all the work that the bulls have done over the past 3 years. Nonetheless, the stock did spike up to close near the highs of the week, suggesting further upside above last week's high at .74 cents will be seen this week. If the bulls can generate a weekly close above .76, the .52 cent low will become a new bottom of consequence. The .91 cent weekly close resistance area is now pivotal weekly close resistance. Using the daily chart, short-term pivotal resistance is found at .78. Support is now found at .52. FSLR generated a new 8-week low but then reversed to close in the green and near the highs of the week, suggesting further upside above last week's high at 43.07 is expected to be seen this week. The positive reversal made the previous weeks close at 40.55 into a needed/required successful retest of the previous 16-month weekly closing low at 39.38, suggesting the chart is now fulfilled to the downside and that the traders will now be looking for upside objectives. Short term pivotal resistance is found at 45.81 and mid-term pivotal at 47.79. Pivotal and likely chart damaging intraweek support (if broken) is found at 38.45. Probabilities favor the bulls. MCIG made a new 13-month intraweek low at .142 but then reversed to close very slightly in the upper half of the week's trading range suggesting a slightly higher possibility of going above last week's high at .166 than below last week's low at .142. The stock closed exactly at the 200-week MA, currently at .152, and if the bulls can generate a green weekly close next Friday, that line will be tested successfully and should bring new buying interest. Nonetheless, the stock has now generated 5 red weekly closes in a row and 7 out of the last 8 so it is time to see what the bulls can do (if anything). The biggest problem for the stock is not the industry but the fragile nature of the company. Intraweek resistance is found at .20 and daily close resistance at .182. A break of those resistance levels will bring in new buying interest. SLCA generated a positive reversal week, having made a new 6+-year intraweek low and then closing in the green and near the highs of the week, suggesting further upside above last week's high at 11.03 will be seen this week. The stock got within $.28 cents of the all-time low at 9.02, suggesting that buying interest has started to be seen, given that the fundamentals of the company do not favor new all-time lows being made. The green weekly close will also make the previous week's close at 10.24 into a successful retest of the all-time weekly closing low at 9.74, if and when another green weekly close is seen next Friday. Short-term pivotal resistance is found at 11.03. A break above that level should carry the stock up to the daily close resistance at 13.01, which if broken on a daily closing basis would suggest a bottom has been built. A break above 15.72 would be a new buy signal. Probabilities favor the bulls this week.
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1) ENG - Averaged long at 1.764 (5 mentions). No stop loss at present. Stock closed on Friday at .67. 2) ARNA - Averaged long at 3.725 (4 mentions). No stop loss at present. Stock closed on Friday at 3.89 (new price (38.88). 3) CLF - Averaged long at 8.976 (3 mentions). No stop loss at present. Stock closed on Friday at 7.86. 4) FSLR - Averaged long at 49.51. (3 mentions). No stop loss at present. Stock closed on Friday at 42.39. 5) CCJ - Averaged long at 10.637 (5 mentions). Stop loss now at 9.65. Stock closed on Friday at 11.15. 6) CLB - Purchased at 57.04. Averaged long at 75.266 (3 mentions). No stop loss at present. Stock closed on Friday at 59.23. 7) CRON - Averaged long at 9.577 (4 mentions). No stop loss at present. Stock closed on Friday at 10.42. 8) FCEL - Averaged long at 2.2275 (4 mentions). No stop loss at present. Stock closed on Friday at .050 (new price .61). 9) SLCA - Averaged long at 17.667 (4 mentions). No stop loss at present. Stock closed on Friday at 10.64. 10) MCIG - Purchased at .26. No stop loss at present. Stock closed on Friday at .1549. 11) AAPL - Purchased at 147.37. Liquidated at 148.64. Profit on the trade of $127 per 100 shares minus commissions. 12) AAPL - Purchased at 146.79. Liquidated at 156.63. Profit on the trade of $984 per 100 shares minus commissions.
Previous Newsletters
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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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