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Issue #711 
Mar 14, 2021 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| NASDAQ Confirmed Correction is Occurring!
DOW Friday closing price - 32778
New all-time intraweek and weekly closing highs were made in the DOW and the SPX and the NASDAQ negated the sell signal given the previous week. All indexes closed on or near the highs of the week and further upside above last week's highs (DOW at 32793, SPX at 3960 and NAZ at 13433) are expected to be seen this week. The stimulus program was passed by Congress, giving the economy an additional $1.9 trillion and meaning that further recovery of the economy is all but guaranteed. In addition, the inflation figures remained low, which suggests interest rates will remain at zero for the immediate future. These were the reasons for the resumption of the uptrend.
The DOW remained the strongest index and that does mean that traders are being a bit more conservative about further upside. Next month's economic reports will start reflecting everything that has happened since the big drop seen in March 2009. It is expected that the inflation figures will now start rising and if they do, it will be a drag on the economy. As such, the buying over the next few weeks will likely be tempered somewhat by the apprehension those reports will bring. By the same token and with no resistance levels above, the bears have no area where they can gather to sell in unison, meaning that the market will likely go up consistently but slowly.
The Tech Industry remains under some sell pressure as an economy that is returning to normal and away from the computers will cause less buying of internet related products, which the Tech Industry depends on. As such, the NASDAQ is likely to be the only index the bears can use to measure the upside capacity of this rally.
To the upside there is no resistance in the DOW or in the SPX. In the NASDAQ there is minor to decent intraweek resistance at 13607. Above that level there is resistance at 13728, very minor at 13985 and decent to strong as well as pivotal at the all-time high at 14175. To the downside, the DOW shows no intraweek support until minor at 31158 and minor again at 30911. Pivotal support is found at 30547. Nonetheless, on a daily closing basis, there is important support at the previous all-time high daily close at 31961. In the SPX, there is very minor support at 3885, a bit stronger at 3805 and at 3789 and pivotal at 3723. On a daily closing basis, there is support at the previous all-time high daily close at 3934. In the NASDAQ there is decent intraweek support at 12985 and pivotal at 12397.
It is evident that for the short-term, the SPX and the NASDAQ are the indexes to watch. The SPX made a new all-time high daily close on Friday and the bulls need to continue that on Monday or risk getting a failure signal. The NASDAQ has two levels that need to be watched this week at 13607 and at 12985. The former is an established resistance level that if broken will give the bulls ammunition to test the all-time highs, while the latter is support that if broken again would weaken and the rally substantially. With the index having closed right around the middle of that trading range area, both the bulls and the bears have work to do to accomplish their goals.
It is evident at this time and without any economic reports of catalytic importance due out this week, that the bulls are presently in control and that further upside is the most probable scenario. Nonetheless, it is also evident that with potentially negative economic reports to come out at the beginning of next month that the bulls will likely play a conservative game, which in turn means small upside and with some also small peaks and valleys.
SILVER generated an inside week but a green weekly close and in the upper half of the week's trading range, suggesting further upside above last week's high at 26.54 will be seen this week. The inability of the bears to take Silver below the previous week's low in spite of closing near the low, suggests the bulls still have a better handle on Silver than on Gold and that the short-term uptrend remains intact. Indicative daily close support is found at 25.53 and indicative daily close resistance is found at 26.68. Whichever is broken first will gain an added edge. Evidently, if the bulls in Gold can get it above $1739, the bulls in Silver will gain a decided short-term edge. Probabilities favor the bulls.
OIL generated a negative reversal week, having made a new 29-month intraweek high but then closing red. Oil closed in the middle of the week's trading range, suggesting equal chances of going above last week's high at 67.98 or below last week's low at 63.13. Nonetheless, the red weekly close makes the previous week's short term assessment increase in probability ("Back in January 2019 through August 2019, the $66 level was a pivot point between 59.20 and 74.34 (based on weekly closes). The first time it got up to this level was up to 66.14 and what then followed was a drop down to 59.20. That was then followed by a rally back up to 65.88, which was then followed by a drop down to 62.06. Then Oil broke that level and got up to 71.28, then a drop down to 65.06, a rally to 73.80, then a drop down to 65.91, a rally then to 74.34 and then the breakdown that ultimately took oil to the low levels seen this past year"). Whichever level (67.98 or 63.13) gets broken this week will generate follow through. Below 63.13 there is no intraweek support until 59.24. Above 67.98, there is no resistance until 72.83 is reached As such, a break of either is likely to bring about at least a $4 move in that direction. Probabilities slightly favor the bears if only because there is past history at this level that suggests the next short-term direction is down.
DOLLAR generated a negative reversal week, having made a new 5-month intraweek high but then closing red and in the lower half of the week's trading range, suggesting further downside below last week's low at 91.36 will be seen this week. The Dollar closed on the upper half of Friday's trading range, suggesting the first course of action for the week (on Monday) will be to the upside above Friday's high at 91.96. Resistance is found at 92.50 and if not broken and then is followed by a lower low and a red close the following day, the bears will get a short-term edge for a drop down to 91.04 the week after. Overall though, the bulls remain with the midterm edge though for the short term, probabilities slightly favor the bears.
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Stock Analysis/Evaluation
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CHART Outlooks
I have several mentions this week but then again, the stocks need to get to the desired entry points to be instituted. None are there now.
There are 2 new mentions that were not there last week and 1 that was but that the desired entry point has changed due to the action seen last week.
PURCHASES
CRON - Friday Closing Price - 10.34
CRON recently broke a multi-month weekly close resistance level at 8.55/8.63 and generated a rally up to the 15.83 level, reached 5 weeks ago. Since then, the stock has been correcting back down and the previous week it got all the way back down to 8.66 (ding, ding, ding). The stock did close in the lower half of the week's trading range the previous week and further downside below 8.66 was expected to be seen. Nonetheless, the bears were unable to take it lower and an inside week and a green weekly close near the high of the week occurred, suggesting that a spike low to support has been achieved.
CRON is now showing on the chart that the $10 demilitarized zone is going to be the new support level and therefore purchases should be considered in that area, with the preferred entry point being around 9.79.
To the downside, CRON now has pivotal support at the low seen the previous week at 8.66, meaning that the stop loss point has now been raised to 8.55, making the risk/reward ratio as good as it was in last week's mention.
To the upside, CRON has no intraweek resistance until the 11.07 is reached and that is a very minor resistance. Above that level, there is minor to decent resistance between 11.67 and 11.75. A break of that area and there is open air until the 13.01 area is reached. Probable target of this mention though, is the 14.00-14.70 level as stronger resistance is found there.
The Cannabis industry is likely to be supported strongly by the Biden administration the next 4 years. Recently nothing has been done by the administration due to the pressing problems of the pandemic as well as of the Stimulus and infrastructure but it is likely that before the end of the year and perhaps as early as the end of summer, the legalization of Cannabis will be addressed and at that point, this stock could go substantially higher. For now, a trading range between $10 and $14/$15 is likely to be seen. With the stock trading below the $10 level, it is likely a good purchase.
Purchases of CRON around the 9.80 level and using a stop loss at 8.55 and having a 14.70 objective will offer a 4-1 risk/reward ratio. My probability rating on the trade is a 4 (on a scale of 1-5 with 5 being the highest).
AAPL Friday Closing Price -121.04
AAPL made a new 14-week intraweek low but then rallied to close near the high of the week and only $.039 cents below the previous week's close. It is evident that this weekly closing area is considered support by the traders as the stock has closed for 3 weeks in a row at 121.26, at 121.42 and Friday's close at 121.03. All of this in spite of the fact that the NASDAQ dropped 10% in value during those same 3 weeks. In addition and using the previous 2 all-time high weekly closes at 124.81 and 139.07 and drawing a line between them and then using the previous low weekly close at 108.86, an upward channel line can be drawn that hooks up with a perfect channel at Friday's closing price. It is not a built channel yet (as a green weekly close has to occur to build it) but with the NASDAQ now giving a negation of the sell signal and looking to go higher, it suggests that the stock is likely to do the same.
With last week's low at 116.21, AAPL shows exactly a 20% correction from its all-time high at 145.09, meaning that the correction is now likely over as anything over 20% signifies a trend change and if there is one stock that personifies an uptrend, it is AAPL. This is also further strengthened with the now high probability that the uptrend is resuming in the index market.
To the downside and on an intraweek basis, AAPL shows no support until minor support at 112.59. Nonetheless, getting down to that price would negate all the chart positives shown above, meaning that if it gets down to that level and breaks that minor support, it would be a sign that the uptrend is over. That is an unlikely event given that the recent unveiling of the new Iphone 12 has been a success and there is talk that the company will be making a statement in the next few weeks or months about the new Apple Electric Car that will likely begin production in 2024 or 2025 and compete with Tesla. The simple unveiling of their plans for that car officially, would likely give the bulls a reason to make a new all-time high.
For the time being though, this mention will only offer an objective of retesting the all-time high, which has not yet occurred and needs to occur before any kind of a downtrend can occur.
To the upside and on an intraweek basis, AAPL shows resistance at 125.39 and then open air until 137.88/137.98, which will be the objective of this mention.
The difficult part in this trade is the "desired" entry point being reached. A purchase between 118.39 and 119.00 would be the desired entry point but on Friday the stock did get down to 119.16 and then closed near the high of the day. The stock gapped down on Friday between 121.26 and 121.17 and closure of that gap is likely to occur on Monday. There is minor intraweek resistance at 123.21 that is short-term pivotal and if broken, would strongly suggest that a drop down to the desired entry point will not occur. As such, this mention is contingent on that level of resistance not being broken before the 119.00 level is reached.
Purchases of AAPL between 118.39 and 119.00 and using a stop loss at 112.47 and having a 137.98 objective offers a 2.8-1 risk/reward ratio. Nonetheless and depending on getting the desired entry point, the rating on the trade is a 4.25 (on a scale of 1-5 with 5 being the highest). In addition to the high probability rating, this is one of the few stocks that has shown such a consistent upside and positive fundamentals, that support a lower risk/reward ratio being absorbed.
SALES
XOM Friday Closing Price - 61.97
XOM has doubled in price over the past 5 months, having rallied from a low seen in October at 31.11 to last week's high at 62.55. The rally has been basically straight up with only one small corrective phase in January when the stock corrected 13% from a high of 51.08 to a low of 44.28 over a period of 3 weeks. The stock is presently overbought and reaching a level of resistance of consequence at the $67. It is a level of resistance that has been in existence for 11 years and that is further strengthened by the 200-week MA, which is currently at 67.70. That MA line has not been broken to the upside since November 2018 and has only been broken 4 times since 2016 and even then, the breaks of the line have been minor in nature and only lasted no more than 4 weeks. Simply stated, a positive change of fundamentals would have to occur at this time for that line to break and there doesn't seem to be anything fundamentally positive on the immediate or even midterm horizon that could occur that would change the outlook.
The desired entry point into a short trade of XOM is still $5 away from Friday's close but the stock has been seeing trading ranges of anywhere from $3 to $5 on a weekly basis and as such, it is possible that desired entry point could be reached this week. I doubt it will be but this mention is not just for this week but whenever the stock gets up to that level.
To the downside and on an intraweek basis, XOM shows no support until that correction low at 44.29. On a daily closing basis though, support is shown at 54.74 and on a weekly closing basis, at 53.09. When the stock begins to correct, the $50 level will be a magnet and as such, will be the mention's objective.
To the upside, there is no intraweek resistance until minor (but pivotal) at 71.37. Nonetheless, on a weekly closing basis, there is numerous resistance between 67.43 and 68.13.
Sales of XOM above 67.00 and using a stop loss at 71.47 and having a 50.00 objective will offer a 3.8-1 risk/reward ratio. My rating on the trade is a 4 (on a scale of 1-5).
GPS Friday Closing Price - 30.81
I gave this mention on Friday on the message board and shorted the stock at 30.75. Nonetheless, this is a very low probability rated trade that is done exclusively on charts. The fundamentals seem to suggest that GPS will continue higher.
The chart reason for the trade is that GPS has an well-established weekly close resistance area between 30.43 and 30.39 with the 30.43 level having been an important support back in 2012 and the 30.35 an important resistance in 2016. With the stock having closed in that area on Friday, the short was worth taking, especially since there is some intraweek resistance of consequence at 31.39 that was a spike high seen in February of 2019 and that hasn't been broken since. As such, the trade offers a very small and clearly defined risk factor. With the downside objective being a drop back down to the 200-week MA, currently at 22.66, and perhaps even as low as the $20 level where there is plenty of established support, the trade offers a risk/reward ratio of 11-1. The probability rating though, is no better than 50-50 and perhaps even less due to the fact the index market is likely to continue higher and the stock did close on Friday above the 30.43 level. Nonetheless, these trades are worth doing if only because 11-1 risk/reward ratio trades with clearly defined support and resistance levels need to be done each and every time as only 1 out of 10 turning out to be profitable, means a plus in the portfolio results.
Last week's mentions (TLRY, ZLAB and NGM) are still viable and still effective mentions. Nonetheless, none of those is likely to get down this week anywhere near the desired entry points given in the mentions and therefore I did not mention them again on this newsletter. If by any chance they do get down this week to the desired entry points, I will be a buyer.
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Updates
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| Updates on Held Stocks |
Closed Trades, Open Positions and Stop Loss Changes |
| AG generated an inside week but a green weekly close that made the previous week's intraweek low into a double low on the daily chart at 15.01/15.13. The stock closed on the high of the week and further upside above last week's high at 16.88 is expected to be seen. One additional chart positive is that on Friday, the stock generated a positive reversal day, having made a new 4-day low and then closing green and above the previous day's high, meaning that a rally above 16.88 on Monday will also mean that double low has been retested successfully and confirmed as such. If that occurs, stop losses can now be raised to 14.91. To the upside, "very minor" intraweek resistance can be found at 17.39 and at 18.07. The first real resistance of some consequence is found at 19.29. By the same token, there is a breakaway/runaway gap formation to the downside in which the runaway gap is at 18.84, meaning that the bottom of that gap at 18.70 will also be resistance. If the gap is closed, then the breakaway gap at 20.85 is likely to be targeted. Nonetheless and in looking at the Silver chart, the probabilities favor the stock trading this week (or between the next 2 weeks) between 16.43 and 18.70. If the stock goes above Friday's high on Monday, then Friday's low at 15.64 will also become a support level with indicative implications if broken. Probabilities favor the bulls. AU followed through to the upside with a 2nd green weekly close. In addition, the stock closed in the upper half of the week's trading range, suggesting further upside above last week's high at 23.10 will be seen this week. Nonetheless, the bulls were not able to accomplish anything tangible (other than the statement that the recent correction is over for now), having been unable to close above the established weekly close resistance at 22.75. On an intraweek basis, there is an open gap up at 23.67 that is likely to be a target to be closed this week. Above that level though, there is a mountain of intraweek resistance between 24.00 and 24.44 that will require Gold to break above the $1739 level convincingly in order to break above. If that break occurs, the 200-day MA is currently at 25.79 and that level is a resistance that I do not see the bulls being able to break at this time. As such and for a trader, any rally near that level will be a reason to consider liquidating the positions held. To the downside, there is intraweek support at 21.94 that if broken would suggest a retest of the recent low at 19.55 will be seen with a drop likely to the $20 demilitarized zone. If 21.94 is not broken, then the stock should have a decent up week this week. Probabilities slightly favor the bulls for a trading range this week between 22.00 and 24.00. BTZI generated an inside week but another red weekly close, though only by $.01 cents below the previous week's low. Nonetheless, this was a positive given that the stock dropped 82% in value the previous 2 weeks and did close in the lower half of the week's trading range, suggesting further downside below the previous week's low at .07 should have occurred last week. Using the daily chart, the stock did very little this past week, trading in a narrow .034 trading range. The stock did close near the high of the week and further upside above last week's high at .138 is expected to be seen this week. For the past 3 days, the trading ranges have been smaller and smaller and for the past 5 days the stock has traded mostly sideways with a small bias to the upside and that is actually a positive. The stock did drop below a previous day's low on Wednesday and then went above the previous day's high on Thursday, meaning that on the daily chart, the .07 low has now been tested successfully. By the same token, the .135 to .139 level was clear resistance this past week as that level was seen every single day but not broken. A break above .139 will have open air above until the .20 level is reached, meaning that is a pivot point this week. The 200-week MA is currently at .16 and as such, if the bulls are able to break above .139 this week, there is a decent chance they could close above the MA line next Friday and that would open the door for resumption of the uptrend. Evidently the.117 low seen last week is short-term support that if broken would take the stock down to the next weekly close support level at .105. The fundamentals support the bulls so the probabilities favor the bulls this week. CNX generated a new 28-month intraweek high and closed near the high of the week, suggesting further upside above last week's high at 15.27 will be seen this week. The stock did generate a negative reversal on Friday and a close in the lower half of the day's trading range, suggesting the first course of action for the week will be to the downside below Friday's low at 14.71 will be seen on Monday. A retest of the 14.03 daily close breakout is likely to be the objective of the traders before new buying interest is seen again. The upside objective of this breakout is the $17 level, likely to be reached within the next 2-4 weeks. This stock has proven to be a tradeable stock (not so much a trending stock) and therefore consideration should be given to liquidating the positions when the $17 level is reached. The chart suggests that for the next 3-6 months, the stock is likely to trade between $14 and $18, with both of these levels unlikely to be broken in either direction unless some fundamental change occurs. Probabilities favor the bears slightly this week but only for a small drop to test the breakout level. ENG generated a big bounce this week in which it increased in value 75% from the week's low to the week's high. The bulk of the rally came after Bill Meade, a highly respected and heavily followed trader on Twitter with a following of over 165,000 people, recommended purchasing the stock. From a chart point of view, the close on Friday at 5.93, negated the previous week's failure signal when the stock closed below the weekly close support at 5.19. The negation of that break not only makes the previous weeks low at 3.60 into a major intraweek support level but makes the 5.19 weekly close level into a support unlikely to be broken unless some negative fundamental change occurs. The stock did fall back after that initial surge of buying on Thursday, to generate an inside day on Friday and a red daily close, meaning that the first course of action for the week is likely to be to the downside below Friday's low at 5.58. Nonetheless, on the weekly chart, the stock did close in the upper half of the week's trading range, suggesting further upside above last week's high at 7.16 will be seen this week. The original breakout on the daily closing chart that took the stock up to the 9.40 level came from a daily close at 5.10. As such, that level is likely the target for the beginning of the week. If you have not gotten involved with the stock before, that would be the area to buy some shares this week (if seen). To the upside and on a daily closing basis, the 6.75 level is pivotal. A daily close above that level would suggest the 9.40 rally high will be tested. It is important to note that the $9 level has shown no previous established resistance other than perhaps psychological at $10, meaning that if the stock generates a confirmed daily close above 6.75, the probabilities will favor a new multi-year high and a rally to the $10 level. Any confirmed daily close below 5.10 would now be a negative. Probabilities favor the bulls. NEM generated a 2nd green week and a close on the high of the week, suggesting further upside above last week's high at 59.02. In addition and on the daily chart, the stock generated a positive reversal day on Friday, having gone below Thursday's low and then closing above Thursday's high, suggesting the rally will continue this week. There is absolutely no resistance above until 60.92 level is reached, meaning that another 3.5% appreciation in price can occur this week. The key level for the mid-term is the 200-day MA, currently at 61.76. Until that level is broken convincingly and the break above confirmed, the stock is likely to simply be in a trading range (not resuming the uptrend). The 56.55 level is now the new support level that should not be broken anytime soon. The chart suggests the stock will be trading for the next 2-3 months between 56.55 and 62.55. This is the strongest of the Gold stocks and the first one to hold and the last one to liquidate. Probabilities favor the bulls this week. PGEN generated a new 6-week intraweek and weekly closing high and closed in the upper half of the week's trading range, suggesting further upside above last week's high at 9.44 will be seen this week. This move came the week after an attempt to break the lows occurred and that failed, meaning the bulls have the upper hand for further upside until the resistance area at the $10 demilitarized zone is reached. There is important and somewhat pivotal resistance at that area with a previous intraweek high at 9.89 and the 200-week MA, currently at 10.09. This will be the 2nd attempt at breaking the MA line and ending the long term downtrend. Long term pivotal resistance is found at 11.10 that if broken, a strong short covering rally is likely to occur. Pivotal support is now found at 7.81 (based on a weekly close). Probabilities favor the bulls this week. SRUTF based on the weekly close, the week was uneventful with a close $.0023 cents below the previous week's close. The stock has gotten back into a sideways and non-eventful trading range seen the previous 15 weeks, meaning that the small gains obtained have not been given back. It must be noted though, that both CRON and TRLY seem to be restarting the recent uptrend and if that is proven to be the case, some new buying interest is likely to be seen in the stock. Pivotal intraweek resistance is found at .067 and pivotal intraweek support is found at .032. Probabilities favor more of the same thing this week but in looking at the charts of the big companies, I do believe some movement to the upside will begin within the next 1-3 weeks.
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1) GPS - Shorted at 30.75. Stop loss at 31.49. Stock closed on Friday at 30.83. 2) PGEN - Purchased at 8.10. No stop loss at present. Stock closed on Friday at 8.96. 3) SRUTF - Averaged long at .0738 (3 mentions). No stop loss at moment. Stock closed on Friday at .041. 4) BTZI - Purchased at .12. Averaged long at .1225 (2 mentions). No stop loss at present. Stock closed on Friday at .134. 5) W - Shorted at 324.00. Covered shorts at 305.50. Profit on the trade of $1850 per 100 shares. 6) FSLR - Liquidated at 76.37. Averaged long at 75.87. Profit on the trade of $100 per 100 shares (2 mentions). 7) AU - Averaged long at 26.106 (6 mentions). No stop loss at present. Stock closed on Friday at 22.56. 8) NEM - Averaged long at 61.08 (6 mentions). No stop loss at present. Stock closed on Friday at 58.98. 9) CNX - Averaged long at 9.10 (2 mentions). Stop loss now at 12.61. Stock closed on Friday at 14.89. 10) FNV - Liquidated at 118.02. Averaged long at 119.206. Loss on the trade of $356 per 100 shares (3 mentions). 11) AG - Purchased at 16.84. No stop loss at present. Stock closed on Friday at 16.82. 12) ENG - Purchased at 4.80. No stop loss at present. Stock closed on Friday at 5.93. 13) FSLR - Purchased at 76.15. Liquidated at 75.75. Loss on the trade of $40 per 100 shares.
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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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