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Issue #605 
Mar 3, 2019 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Rubber Band Stretches to the Max! This Week Pivotal.
DOW Friday closing price - 26026
The indexes (with the exception of the DOW) generated yet another green week (the 10th in a row) and once again closed near the highs of the week, suggesting further upside above last week's highs will be seen this week. The DOW closed 4 points lower but for all intents and purposes, it too continued higher as 4 points is meaningless. The gains continue to pile on but on a weekly closing basis, the bulls have not been able to make a statement of consequence as the resistance levels have not yet been broken convincingly (DOW at 25989, SPX at 2786 and NASDAQ at 7560). It can be said that the SPX is clearly above the 2786 level but on a daily and intraweek basis, the area between 2800 and 2815 is the true resistance area. The NAZ did break a level of some importance at 7560 but it is old resistance from March 2018 and the intraweek resistance at 7637 has not yet been broken, meaning that the bulls have not yet made a bullish statement.
This rally continues to be fed by the probability of a Trade deal between China and the U.S. being made as both countries have stated that a deal is close to completion. Nonetheless, the bulls were aided a bit this week as on Friday the GDP report came in better than expected (GDP at 2.6% vs expected at 2.3%). The ISM Index report was slightly lower at 54.2 vs expected 56 but it was not considered low enough to be paid attention to. If GDP had not come in better than expected, it is unlikely the indexes would have generated a green weekly close as they had traded most of the week below last week's close.
Certainly, the closure of the Tariff War would generate positive economic results on any level of closure. By the same token, it has been anticipated for several weeks now that it is to occur and how much of the benefits of such a closure have already been factored in to the prices is a big question mark. It is certainly possible and perhaps even probable that a good portion of the rally has been factored in already and it might be more than the reality may bring, meaning that it is possible that a resolution would be seen more as a negative to the present price than a positive. On a positive note for the bulls, it seems that an announcement of a trade deal will not be made for another 3-4 weeks as the meeting between the two parties the previous week ended up with an agreement that Trump and Xi would meet to finalize such a deal toward the end of March at Mar-a-Lago, meaning that for that period of time the momentum could continue in the index market.
To the upside and on an intraweek basis, the DOW shows minor to perhaps decent but pivotal resistance at 26277. Above that level, there is no resistance until decent at the previous all-time intraweek high at 26616, minor to perhaps decent at 26769 and strong at the all-time high at 26951. The SPX shows minor to decent but short-term indicative resistance at 2800 and then pivotal at 2815. Above that level, there is decent resistance at the previous all-time high at 2872 and then nothing until the present all-time high at 2940. The NASDAQ shows minor to perhaps decent resistance at 7572 and then decent between 7637 and 7670. The 7637 was the previous all-time intraweek high prior to going up to 8133.
To the downside and on an intraweek basis, Thursday's lows in the indexes are all minor but short-term pivotal support. In the DOW it is at 25762, in the SPX it is at 2674 and in the
The indexes all got up very close to the pivotal intraweek resistance levels as the DOW got up to 26241 and the resistance is at 26277, the SPX got up to 2813 and the resistance is at 2815 and the NASDAQ got up to 7603 and the resistance is at 2637. As such, it can be stated that the bulls were able to edge out further upside without breaking resistance but this week that is no longer possible because if the indexes do go above last week's highs this week, it will be close to impossible to prevent the resistance levels from breaking. This is especially true in the SPX as any rally of more than 2 points would generate a break or create a triple high which would likely be broken at some point in the near future.
This coming week there are no scheduled reports that could be considered possibly catalytic until Friday, which is when the Jobs report comes out. As such, traders will likely be doing the same thing that they did last week, which is some upside at the beginning of the week, followed by weakness until Friday's Jobs report.
Once again this week, it is difficult for me to offer a probability rating for either side. The bulls have momentum and they were able to accomplish some unexpected gains the last 2 weeks but the rally has reached levels that are difficult to maintain without some additional fundamental positives coming out. It does need to be mentioned that since 1997 (22 years) there has not been 10 weeks in a row of green weekly closes and on that occasion the scenario was different as the indexes generated a new all-time highs on the 3rd week of the rally starting and had no resistance above. As such and from a common sense point of view, the probabilities of further upside continue to diminish every week a green close is generated.
On this occasion, there is resistance above and the fundamental picture is iffy. Simply stated, there are good reasons on both sides for the rally to continue or to fail. I am still leaning to the bear side if for no other fundamental reason than the economy is not in better shape than it was in October when the indexes topped out. From a chart point of view, the indexes have accomplished gains (such as 10 green weekly closes in a row) that have only been accomplished once in the past 30 years and only when the fundamental picture was clearly defined as bullish (which it isn't now). As such, I continue to believe that the all-time highs will not be broken or even tested closely, meaning that to me it is only a matter of "when" the indexes fall and not a matter of "if" the indexes fall. Will it be this week? That is not something I can venture an intelligent opinion on.
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Stock Analysis/Evaluation
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CHART Outlooks
Once again, nothing was decided this past week but the bulls remain in control. Levels of resistance started to get broken but not yet convincingly, leaving direction from this area still a toss of the coin. Without a clear market direction, choosing stocks to trade remains an individual event. Nonetheless, this week is looking pivotal, especially since on Friday the Jobs report comes out and that often causes movement.
Having chosen the short side and already short 5 different stocks, I did not even look at new stocks to short. As such, no new mentions are being given this week. By the same token, I do plan to once again add to existing short positions.
ORCL Friday Closing Price - 52.51.
ORCL is near its all-time high at 53.48 but it has taken 10 weeks of green weekly closes to reach 53.02 and the probabilities do not favor the bulls having the ability to make a new high and sustain it. Support below is not found until the $48-$49 level and even then that support is minor. As such and from simply a risk/reward situation, shorting the stock anywhere near the $53 level and only using the minor support levels as objectives, still offers at least a 4-1 risk/reward ratio.
Sales of ORCL around the $53 level and using a 53.58 stop loss and having at least a 49.70 objective offers a 4-1 risk/reward ratio.
My rating on the trade is a 3 (on a scale of 1-5 with 5 being the highest).
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Updates
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| Monthly & Yearly Portfolio Results
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Closed Trades, Open Positions and Stop Loss Changes
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Status of account for 2007: Profit of $9,758 per 100 shares after losses and commissions were subtracted.
Status of account for 2019, as of 1/1 Profit of $12651 using 100 shares per mention (after commissions & losses) Closed out profitable trades for February per 100 shares per mention (after commission)
MDT (long) $571
Closed positions with increase in equity above last months close minus commissions.
MDT (long) $152 Total Profit for January, per 100 shares and after commissions $2087 Closed out losing trades for February per 100 shares of each mention (including commission)
AAPL (short) $833
UGAZ (long) $39 AXP (short) $104 AAPL (short) $1 Closed positions with decrease in equity below last months close plus commissions. NONE Total Loss for December, per 100 shares, including commissions $977 Open positions in profit per 100 shares per mention as of 2/28
BIDU (short) $1183
Open positions with increase in equity above last months close.
FSNR (long) $171
ARNA (long) $158 FSLR (long) $786 ENG (long) $23 Total $2435 Open positions in loss per 100 shares per mention as of 2/1
IBM (short) $32
ORCL (short) $75 AXP (short) $94 AAPL (short) $6 Open positions with decrease in equity below last months close.
FCEL (long) $2 Total $461 Status of trades for month of February per 100 shares on each mention after losses and commission subtractions.
Profit of $3084
Status of account/portfolio for 2019, as of 2/28Profit of $15735 using 100 shares traded per mention.
AAPL generated another green weekly close, the 8th in a row, and closed near the highs of the week, suggesting further upside above last week's high at 175.87 will be seen this week. Nonetheless, the stock closed at the decent weekly close resistance level between 174.67 and 174.97 that suggests a red weekly close next Friday is the most likely scenario unless there is a fundamental breakout in either in the index market or the stock, Pivotal support is now found at last week low at 172.37. As is the case with the indexes, the bulls keep on inching upward but without any clear sign of strength. Closure of the gap at 176.27 would suggest a rally up to the $180 level. Probabilities favor the bears for a red weekly close next Friday.
ARNA reported earnings last week and evidently they were less than expected as the stock fell close to 7% in value immediately after the report came out. Nonetheless, by the end of the week the earnings report was dismissed and the stock ended up generating a positive reversal week, a break of the decent intraweek resistance at 51.20 and a new 4-year intraweek and weekly closing high. The stock closed near the highs of the week and further upside above last week's high at 51.44 is expected to be seen this week. Last week's low at 47.88 is now pivotal intraweek support that if broken would generate new selling interest. Nonetheless, any daily close below 49.17 would be just as negative. To the upside, there is minor resistance at 56.40 and then nothing until minor to decent resistance at 59.30. The stock has now generated 10 green weekly closes in a row and it would not be surprising if a red close near the previous high weekly close at 49.47 is seen this week. Probabilities continue to strongly favor the bulls. AXP was once again a copy-cat to the indexes this week, having made the 10th green week in a row. The stock made a new 4-month intraweek high and now shows no intraweek resistance until 110.38 and decent weekly close resistance at 110.90. With no other resistance above, probabilities strongly favor the stock getting up to $110 area this week. By the same token, the stock is facing the same chart situation as the indexes without the pivotal nature of the area being in place other than at 111.77. As such, it is highly likely the stock will once again mimic what the indexes do. Pivotal support remains at 106.24 that if broken would be suggestive of additional shorts being put on. Probabilities favor the bulls this week but the $110 level will be difficult to break. BIDU bulls were unable to generate a mimicking rally with the indexes and the stock making a new 5-week low and closing near the low of the week, suggesting further downside below last week's low at 160.60 will be seen this week. Intraweek support is found between 158.52 and 159.54 that is likely to be reached this week. A break of that support would strongly suggest a drop down to the December low at 153.78 will occur. Intraweek resistance is now found at 164.61. This coming week looks pivotal for the stock with the $158/$159 area likely to be reached and the bulls needing that area to hold. Probabilities favor the bears this week. CCJ generated a failure signal as the bulls were unable to stay above the breakout level at 12.08. The stock closed near the low of the week and further downside below last week's low at 11.44 is expected to be seen this week. The 200-week day MA, currently at 11.29, and the 200-week MA, currently at 11.10 are now clear targets for retest. With the 200-week MA having been mostly a brick wall for the past 8 years, a retest of that line is not all that unexpected, especially given the inability of the bulls to generate further upside the past few weeks after the breakout. From purely a chart point of view, those lines should hold up. An intraweek break below 10.61 would be a different matter as it would totally confirm the failure and give new ammunition to the bears. If the stock closes back above 12.08 next Friday, the failure will not be confirmed and the bulls will get new ammunition. Probabilities slightly favor the bears this week. ENG generated an inside week as the bulls were unable to build on the new 13-week intraweek and weekly closing high that was made the previous week. The stock closed near the low of the week and further downside below last week's low at .79 is expected to be seen this week. With only 1 small retest of the multi-year low at .52, it is not unexpected that another retest is to occur, especially given the extended period of time that the stock has been under sell pressure. Decent intraweek support is found at .75 and at .73 that is likely to be seen this week. Weekly close support is found at .80 and at .76 that should not be broken. Company is scheduled to report earnings on March 14th but with this company that can be changed as they often do. Probabilities continue to favor the bulls given the strong fundamental support at these levels. FSLR generated a negative reversal week, having gotten up to the decent resistance between 55.25 and 55.75 with a high this past week at 55.38 and then closing in the red. Nonetheless, it seems evident that there is buying interest at these levels given that the stock got down to 51.22 and the bears were not able to push down further to test the 200-day MA or the 200-week MA, both currently between 50.05 and 50.10, and the stock turned around to close in the upper half of the week's trading range and "only" $.36 cents below the previous week's close, meaning that in spite of the negative reversal, probabilities continue to favor the bulls. Resistance remains decent between 55.24 and 55.75 but the probabilities have now increased that resistance will be broken and there is nothing above until the $60-$65 level is reached. FNSR continued higher, having made another 14-month intraweek high as well as a new 18-month weekly closing high was made as well. The stock closed at a minor to perhaps decent but definitely short-term pivotal weekly close resistance at 24.60. If the bulls can close green next Friday, there is no weekly close resistance above until 27.40. Minor to decent intraweek resistance is found at 25.41 but if broken, it is open air on the intraweek chart until minor resistance is found at 27.89. Minor but short-term pivotal support is found at 24.23. A break of that level would suggest a drop down to the daily close breakout level at 23.44 would occur. Probabilities favor the bulls this week. IBM generated a negative reversal week, having made a new 5-month high at 140.49 and then closing in the red and slightly in the lower half of the week's trading range, suggesting a slightly higher probability of going below last week's low at 137.72 than above last week's high at 140.49. The $140 area on a weekly closing basis is not only decent resistance but pivotal as well and having gotten above $140 and then reversing to close in the red does suggest that the bulls will need help to get above this level, either with some fundamental positive or with the index market continuing higher. With the indexes at an important pivotal resistance area, it is likely that this coming week will be pivotal for the stock. To the downside, there is minor (perhaps very minor) intraweek support at 137.45 and then nothing until minor resistance is found at 132.12. This does suggest that if a top to this rally is found that a drop of consequence is likely to occur, with 116.70 as the objective. Probabilities slightly favor the bears this week. MCIG continued to show weakness with another red weekly close and near the lows of the week, suggesting further downside below last week's low at .15 will be seen this week. This coming week is pivotal as the stock once again closed on the 200-week MA, currently at .155, and another red close next week would be a break of importance. In addition, any break below the recent low at .145 would be negative as well. The weakness being seen is somewhat unexplainable as the company on January 31st reported that its subsidiary, which provides supplies to marijuana and hemp producers, is seeing unparalleled growth and continues to exceed expectations. Nonetheless, that has not been seen reflected in the trading action and the stock is now at a pivotal chart level. Intraweek support is found at .145 but the weekly close support at .155 is pivotal Minor resistance is found at .20 and minor to decent as well as short-term pivotal at .21. A break above .21 would suggest a rally up to the 200-daily MA, currently at .241. I have to say that based on the fundamental picture that probabilities favor the bulls this week. ORCL made a new 11-month intraweek and weekly closing high, continuing its 10-week rally from the 2-year low that was made in December. Nonetheless, this time the bulls were unable to close the stock near the highs of the week (as has been done the previous 9 weeks) and closed right in the middle of the week's trading range, suggesting equal chances of going above last week's high at 53.03 or below last week's low at 52.02. The stock has now climbed up to within $.41 cents of its all-time high at 53.48 and done it in a way that has not been seen since the year 2000 when the stock went from 10.69 to 31.30 without any correction being seen. On that occasion though, the stock had just made a new all-time high and the entire rally was short-covering and new highs being made, which is totally contrary to what is being seen now. It is evident, the bulls will need either new positive news or the indexes breaking resistance levels to continue higher above 53.48. Minor but short-term pivotal support is found at last week's low at 52.02. A break of that level shows no support below until 49.82. On the weekly chart though, no intraweek support is found until very minor at 49.16 and then nothing until 47.98. I do plan on adding short positions on any rally up to or near the $53 level. Probabilities slightly favor the bears 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 .82. 2) ARNA - Averaged long at 3.725 (4 mentions). No stop loss at present. Stock closed on Friday at 5.09 (new price (50.93). 3) FSLR - Averaged long at 49.017. (4 mentions). No stop loss at present. Stock closed on Friday at 53.41. 4) CCJ - Averaged long at 10.637 (5 mentions). Stop loss now at 9.65. Stock closed on Friday at 11.53. 5) BIDU - Shorted at 174.37. Stop loss at 174.27. Stock closed on Friday at 162.09. 6) FCEL - Averaged long at 2.2275 (4 mentions). No stop loss at present. Stock closed on Friday at .038 (new price .466). 7) MCIG - Purchased at .17. Averaged long at .215. No stop loss at present. Stock closed on Friday at .155. 8) AXP - Shorted at 106.80. No stop loss at present. Stock closed on Friday at 108.90. 9) FNSR - Averaged long at 22.39 (2 mentions). Stop loss now at 22.23. Stock closed on Friday at 24.60. 10) AAPL - Shorted at 175.31. Averaged short at 173.12 (2 mentions). Stop loss at 180.35. Stock closed on Friday at 174.97. 11) IBM - Shorted at 140.35. Averaged short at 137.975 (2 mentions). No stop loss at present. Stock closed on Friday at 139.20 12) ORCL - Shorted at 51.42. Stop loss at 53.58. Stock closed on Friday at 52.51.
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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.
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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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