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Issue #759 
April 3, 2022 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Rally Paused. Traders Awaiting Direction.
DOW Friday closing price - 34818
The indexes (with the exception of the DOW), all generated green weekly closes on Friday. Nonetheless and with no exceptions, the closes were either minutely green or minutely red, meaning that they were not indicative. In the case of the DOW, the close was .013% below the previous week's close, the SPX was .005% above last week's close, the NASDAQ was .08% above last week's close, and the RUT was .07% above the previous week's close. The fact that this past week was supposed to be indicative and even pivotal due to the array of important economic reports that came out (Consumer Confidence, GDP 3rd quarterly results, ISM Index and Jobs numbers), means the week totally disappointed as there were no indications or pivots in any direction.
Nonetheless, all indexes closed in the lower half of the week's trading range, suggesting a slight advantage to the bears in what the indexes are expected to do. In fact, the bulls actually had to generate a rally in the last 30 minutes of trading on Friday, just to be able to generate a green close and that definitely gives the bears the edge for this week.
As it is, the bulls have been able to generate a mini breakout in the indexes the past two weeks, with the DOW closing above a previous all-time high weekly close at 34777, the SPX above 4535 and the NASDAQ above a previous pivotal low weekly close at 14791. All of this means that based on the closes seen on Friday, all of those mini breakouts can be negated very easily if any red weekly closes occur next week.
There are no economic reports of importance due out this week, meaning the economy is not going to be playing a fundamental part in the week's movement. The invasion of Ukraine has also calmed down (as far as new news is concerned) and the only other thing of news importance is the inflation figures for the last month, and those are not due out until the following week. As such, this week is likely to be more about charts than anything else. In looking at the daily chart of the indexes, this is what stands out. In the DOW a daily close above 35294 would suggest further upside to 35610 area, while a close below 34358 would suggest a drop down to the 34000 area would be seen. In the SPX, a daily close above 4631 would suggest the 4700 area would be visited, while a close below 4456 would suggest the 4385 area would be visited. In the NASDAQ, a close above 15239 would suggest the 15600 level would be seen, while any red close below Thursday's close at 14838 would suggest that a drop down to at least 14500 would be seen. By the same token, if 14472 is broken, the 14000 level would then be the target.
In looking at the charts and in looking at the reports due out, it seems that this week will be all chart oriented and even then, it will not be a big week in any direction. The traders are likely to wait until Tuesday April 12th and the CPI report (inflation) to make any longer term determinations, and then only if the report is way out of line. By the same token, this week will be mostly about having an "edge". Right now and at these prices, the bulls have a very "slight" edge, meaning they need to work hard to maintain it, and even perhaps strengthen it. The bears will be fighting to prevent that and to give themselves the edge. In this respect, the bears do have an advantage and that is the it is now being predicted that a recession will be upon on something in the next 18 months and in addition, the beginning of May (seasonal down month) is only 4 weeks away. This scenario does not favor the bulls in any way, other than to establish a short term trading rally.
Probabilities for this week are about even, with neither side having a clear advantage.
OIL generated a disappointing-to-the-bulls negative week, having failed to follow through to the upside after Oil closed near the high of the week the previous week, and then making a new 2-week low and closing near the low of the week, suggesting further downside below last week's low at 96.22 is to be seen this week. The news that President Biden announced at midweek that the U.S. was releasing 1 million barrels a day for the next 180 days was the fundamental news that affected Oil negatively and that has slightly (so far) changed the chart to slightly favor the bears. There are 2 levels of support below of importance. On an intraweek basis, the 93.53 is pivotal. A break of that support would suggest Oil will drop down to the 91.24 level (intraweek). A weekly close below 92.72 would generate a downside target of $77-$80. To the upside and on an intraweek basis, the 108.75 level is now short-term pivotal. A break above that level would give the bulls back the edge. Presently and fundamentally, the bears have the edge now. This coming week could be indicative and pivotal. By the same token and given that the index market, Gold, and the Dollar are all looking to have an uneventful week, the same could happen to Oil, with a potential trading range above 93.53 and below 108.75, as the traders await further news.
DOLLAR had a volatile outside week, having gone above and below the previous weeks' high and low. The dollar closed very "slightly" in the upper half of the weeks' trading range, suggesting a slightly higher chance of going above last week's high at 99.37 than below last week's low at 97.68. The reality is that if either happens, it will be indicative as pivotal resistance is at 99.42 and pivotal support is at 97.68. With most everything looking to have an uneventful week, the probabilities are that an inside week will occur and neither the high nor the low will be broken. In using the daily closing chart, though, there is a slight advantage to the bears and the past two high daily closes were successful retests of the multi-month high daily close at 99.29 and yet to the downside, the Dollar did "break" a recently established daily close support at 97.97 with Wednesday' close at 97.76. As such, the bears do have a very slight short-term edge.
BITCOIN is likely to confirm the mini breakout that occurred last week when it closed above the 42711 level, given that today (Saturday), Bitcoin is trading at 46304. The trading range for the week so far, has been 44245 and 48159 and that means that presently it is trading around the midpoint of the week's trading range, therefore not yet giving a probability for what is to happen this week. By the same token, support is now found at 42000 and resistance at 50000 and that suggests that if either the high of the week gets broken this coming week, that it will not be meaningful unless either support or resistance get broken. This is the same case as is being seen in the indexes and other products, which in turn suggests that nothing of consequence will occur this week. The bulls still maintain the short-term edge.
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Stock Analysis/Evaluation
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CHART Outlooks
The bulls failed to give a short-term bullish signal this past week and that suggests that the bears might start doing some shorting this week in advance of the seasonal tendency to go down in May. As such, some short positions can now begin to be considered, if and when desired entry points are reached. By the same token and given that this market is now more of a "stock pickers" market, at least for the next few weeks, there are still some purchases that can be made. As such, there are 3 mentions given this week, one a short and the other 2 a purchase.
PURCHASES
RBLX Friday Closing Price - 46.02
RBLX was a buy mention given the previous week that did not get down to the desired entry point. Nonetheless, the stock did go down in price this past week and reaching the desired entry point this week is now a decent possibility. The stock represents the #1 company in the new META universe of Virtual Reality. An area that promises great growth in the future when companies elect to use Virtual Reality in their sales approach to sell their products. The stock got up to 141.60 just 5 months ago but then proceeded to drop 75% in value to a low of 36.04, a level reached the previous week. That 36.04 low was an all-time low (stock has been trading for only 55 weeks) but a positive reversal occurred the previous week, with the stock rallying to 39% from that low to the previous week's high at 50.24. The previous week, the stock generated a negative reversal week, having gone above the previous weeks' high but then closing red and near the low of the week, suggesting further downside below the previous week's low at 45.53 would be seen this past week. That did occur but the desired entry point around 43.10 was not reached. With the stock likely to go below last week's low at 44.70 this week, it is possible that desired entry point could be reached this week.
RBLX chart suggests that if the stock does get below last week's low that it could end up being the required/needed retest of the low, if and when the stock then goes above this week's high the following week. Given the huge downtrend the stock had been in and which the bulls require to see before stepping in to buy such an intangible and yet unproven concept, a successful retest of the low is required before any new buying is seen. Simply stated, this is a stock that is likely to be traded based on charts than on fundamentals at this time and until more tangible profitable events (contracts) occur.
Using the intraweek daily chart, RBLX shows support at 43.10 and at 39.51. The probability of reaching the first one is very high and of reaching the second one, it is high but slightly lower probability. The stop loss on this trade will be at 35.65, meaning that the risk per share, will be somewhere between $7.45 to a low of $3.74.
To the upside and on an intraweek basis, RBLX has a minimum objective of 66.34, given that at that price there is an open gap that is likely to be targeted for closure if the bottom has been found (likely) and a recovery rally is to occur. In addition, that level is where the initial low week close support (at 67.34) is found. That is the level that when broken, caused the stock to fall to 36.04.
I do want to warn you that RBLX is a volatile stock, meaning that you either have to have a set order at a price to specific price or be on top of the stock during the day, in order to buy at the desired entry point. The volatility is also a positive, given that the upside objective could be reached in short order (not wait a long time. In fact, the chart suggests that if the stock has found a bottom and is ready to recover, that a rally to the $66 level could occur over the next 4-6 weeks.
Purchase of RBLX at 43.10 and using a stop loss at 35.65 and having a 66.34 objective, will offer a 3.2-1 risk/reward ratio. A purchase of the stock at 39.51 will offer at least a 6-1 risk/reward ratio. My rating on the trade is a 3 (on a scale of 1-5 with 5 being the highest).
VNET Friday Closing Price - 6.18
VNET is the second-largest Chinese carrier-neutral and Cloud-neutral data center provider. The stock got to an all-time high at 44.45 in February of last year and then has dropped 92% in value to last week's all-time low at 3.51. Nonetheless, the stock generated a key reversal the previous week, having made the new all-time low and then going above the previous week's high and closing green and near the high of the week, suggesting that a bottom has been found. Nonetheless, no follow through to the upside was seen last week and the stock closed red and in the lower half of the week's trading range, suggesting further downside below last week's low at 5.81 will be seen this week. The stock is showing and island formation on the daily chart, given that it gapped down 2 weeks ago on Monday from 4.67 to 4.29 and gapped up on Wednesday of that same week from 3.95 to 4.73. The weekly reversal and island formation (not yet confirmed) do strongly suggest that the stock has found a bottom.
VNET has no resistance of consequence above until 9.36 and a bit stronger and definitely midterm pivotal at 10.29. Above that level, there is open air to the 200-week MA, currently at 15.29, which is the mentions objective.
Island formations are extremely rare and most often closed. Nonetheless, when not closed, they portend not only a major bottom but also a strong recovery rally. The island formation is likely to be tested this week, especially given that there was no specific positive news for the company. The rally mostly occurring off of the Chinese government statement that they are going to strongly support their market and their economy. As such, a test of the island is likely to be seen, which in turn would give a very favorable entry point to the trade with small risk potential and a large profit potential.
Purchases of VNET around the $5 level (preferably just below $5) and using a stop loss at 3.41 and having at 15.29 objective will offer a 6-1 risk/reward ratio. My rating on the trade is a 3 (on a scale of 1-5 with 5 being the highest).
SALES
AAPL Friday Closing Price - 174.31
AAPL was given as a mention this past week and could have been shorted at the price the stock was trading at the time (around $179) but the probabilities at the time did favor further upside to around the $181 level. In looking for a better entry point, the short was not instituted and now the desired entry point will be changed, as well as the stop loss point lowered, meaning the risk/reward ratio remains about the same.
AAPL did generate a negative reversal week, having made a new 15-week high but then closing red and near the low of the week, suggesting further downside below last week's low at 171.94 will be seen this week. It was also suggestive that the established (4 previous intraweek highs over a period of 4 weeks) intraweek resistance between 181.14 and 182.96 has been tested successfully with last week's high at 179.61. Nonetheless, the stock did close on the high of the day on Friday, suggesting the first course of action for the week will be to the upside, which the bears would likely attempt to generate a successful retest of last week's intraweek high at 179.61. Such a retest is needed given that the stock has rallied straight up for the previous 11-days without any retest of the 5-month low made on March 14th at 150.62. A successful retest of that level would likely bring in new selling interest.
If that is the case (stock failed to make new all-time high), AAPL will start to see selling interest, at least to the tune of testing the recent low at 150.62, which in turn would mean that a good risk/reward ratio trade with a decent probability ratio is available. With the seasonal tendency for the market to head lower in May, there is also a decent possibility that the stock will get into a short-to-midterm downtrend, which would mean the support at $150 could break.
The objective of the mention will be for a drop down to 154.70 to occur. The 200-day MA is currently at 156.71 and given that the support there is on a daily closing basis, the possibility of an intraday drop to 154.70 is there, given that is where there is decent intraweek support. It is expected that AAPL will rally on Monday to an established intraweek resistance between 176.65 and 176.90. With the high made last week now likely to be resistance, the stop loss will now be at 180.35, meaning that the risk factor is approximately $350 per 100 shares. With a downside objective of at least reaching the 200-day MA at 156.71, the short trade will be offering a potential profit of about $2000 per 100 shares, meaning the trade offers at least a 5-1 risk/reward ratio. My rating on the trade is 3.25 (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 2020: Loss of $16,684 per 100 shares after losses and commissions were subtracted. Status of account for 2022, as of 2/28 Profit of $4,714 using 100 shares per mention (after commissions & losses) Closed out profitable trades for March per 100 shares per mention (after commission)
CVE (long) $150 ZLAB (long) $730 DVN (long) $1208 QQQ (long) $1271 VNET (long) $4 Closed positions with increase in equity above last months close minus commissions. CALM (long) $103 Total Profit for March, per 100 shares and after commissions $3,466 Closed out losing trades for March per 100 shares of each mention (including commission)
QQQ (long) $44
QQQ (short) $177 NEM (long) $57 Closed positions with decrease in equity below last months close plus commissions.
TRIP (long) $408 Total Loss for March, per 100 shares, including commissions $988 Open positions in profit per 100 shares per mention as of 3/31
SCCO (long) $1017
Open positions with increase in equity above last months close.
FSLR (long) $3380
AU (long) $135 BTZI (long) $8 SNDL (long) $37 Total $10,836 Open positions in loss per 100 shares per mention as of 3/31
PLNHF (long) $39
PRTS (long) $32 Open positions with decrease in equity below last months close.
ZLAB (long) $4288 Total $4,383 Status of trades for month of March per 100 shares on each mention after losses subtracted.
Profit of $8,931
Status of account/portfolio for 2022, as of 3/31
Profit of $13,635 per 100 shares.
AU generated a positive reversal week, having made a new 5-week intraweek low and then closing green and near the high of the week, suggesting further upside above last week's high at 24.50 will be seen this week. Short-term pivotal intraweek resistance is found at 25.27 and longer term pivotal at 26.96. Nonetheless, any confirmed daily close above 25.76 or a weekly close above 25.53 would be a breakout of note. Short-term pivotal daily close support is now found at 23.21, which if broken would change the outlook of the chart. Probabilities favor the bulls but it is not likely that this coming week any breakout of consequence will occur.
ENG generated follow through to the downside this past week and once again closed near the low of the week, suggesting further downside below last week's intraweek low at 1.25 will be seen this week. The stock did generate a new mini sell signal on the weekly closing chart, having closed below the previous low weekly close at 1.29 (closed at 1.27) but that sell signal was not confirmed given that the daily close support level at 1.25 was not broken. On an intraweek basis, pivotal support is found at 1.15. If broken, a drop down to the 1.00 level is likely to be seen. Probabilities favor the bulls this week for a green weekly close. If that happens, the stock will then have a 3rd successful retest of the low, meaning that the bulls will have successfully built a solid bottom and can concentrate on the upside. Short-term pivotal intraweek resistance is found at 1.60. If broken, especially on a weekly closing basis, the 200-week MA will have been brokento the upside, which in turn would confirm the bottom to this move down is set. Probabilities do favor the bulls but only for a green weekly close. No breakout is expected to be occur this week. FSLR generated yet another green weekly close (the 6th in a row) and did close near the high of the week, suggesting further upside above last week's high at 86.31 will be seen this week. There is no intraweek resistance found until minor at 89.20 and decent as well as pivotal at 91.12 (86.15 and 88.56 on a weekly closing basis). The mention's objective was the $90 level, which now is within reach and highly likely to be achieved, especially when the 200-day MA, currently at 90.59, is a major magnet. Nonetheless, with the week likely to be somewhat uneventful across the board, it may be 2 weeks before the upside goal is reached. Taking profits above $90 is recommended as the stock is likely to correct back down to at least the $80 level, if not all the way down to $73. This move up has been straight up with now 6 green weekly closes in a row. By the same token, the mid-to-longer term objective is the $110 level, meaning that the stock will remain tradeable all year. Probabilities do favor the bulls this week with potential of reaching the 88.50-89.00 level this week. Nearby intraweek support is found at 81.41, which if broken would suggest a correction to this rally is occurring. NEM made yet another new all-time intraweek and weekly closing high and closed on the high of the week, suggesting further upside above last week's high at 83.03 is expected to be seen this week. The chart is very bullish right now with no resistance above until the psychological resistance between $97 and $103 is reached. On a daily closing basis, support is now found at 77.85. A confirmed daily close below that level would suggest the rally is over. Probabilities favor the bulls. PLNHF generated an inside week but did close near the high of the week, suggesting further upside above last week's high at 2.74 will be seen this week. Nonetheless and on a potential negative note, the bulls have now had 2 chances to generate a failure signal against the bulls but have failed. The last 2 weeks, the stock traded as high as 2.94 and 2.74 but closed at 2.51 and 2.61, meaning that the bears remain in control. The House passed the Marijuana bill on Friday but 60 votes are needed to pass in the Senate and right now that does not seem likely to happen. As such, every day from here on in and until a vote is taken, every held stock in that industry is facing a do-or-go-home scenario where "do" would mean a sharp recovery to the upside and "go home" would mean back to the bears being in control. This week does seem to be pivotal for the stock, given that it closed on Friday at 2.61 and a green or red weekly close next Friday would be indicative. In looking at the daily closing chart though, the bulls do have an edge. A daily close above 2.70 would give the edge to the bulls and a close below 2.51 would give the edge to the bears. Probabilities slightly favor the bulls. PRTS generated a 2nd red weekly close and closed on the low of the week, suggesting further downside below last week's low at 6.60 will be seen this week. Evidently, the required/needed retest of the 5.90 intraweek low continues even though on a daily and weekly closing basis, new multi-month lows are being set. As such and considering the 24% rally (normally suggestive of a bottom being found) seen from the 5.90 intraweek low that was set on March 16th, there has not yet been any signs that a bottom has, in effect, been found. Any positive reversal followed by a higher high seen the following day, will be suggestive of a successful retest of the low. That is the outlook that the bulls are hoping for. On a positive note, the RUT continues to outperform the other indexes and that does suggest that these small cap stocks at these depressed prices do have a realistic chance of staging a rally from here on in. Pivotal intraweek resistance is now found at 7.66. I do believe this week favors the bulls slightly, for at least a positive reversal week. SCCO generated another new 12-month weekly closing high and did close on the high of the week, suggesting further upside above last week's high at 78.18. Nonetheless, the previous week's high at 78.72 was not broken, likely because the stock still show and open gap at 74.37 that was not closed with last week's low at 74.92. That gap remains a magnet unless followed up with another gap to the upside. The bulls remain committed to making a new all-time weekly closing high above 79.42. A red weekly close is the one thing that the bulls cannot allow to happen at this time, given that it would be seen as a failure to follow through. As such, the stock needs to continue higher until either the all-time intraweek high at 83.29 occurs, or a confirmed weekly close breakout above 89.42 occurs. Pivotal intraweek support is found at 79.42, which if broken, would be reason to take profits. Probabilities favor the bulls. SNDL generated an uneventful inside week but did generate a red weekly close and a close near the low of the week, suggesting further downside below last week's low at .685 is expected to be seen. It is likely this move down this past week was to retest the weekly close breakout point at .67 and also the break above the 200-day MA, currently at .677. If that is the case, then the stock should generate a mostly green week this week as the stock closed on Friday at .70. Pivotal intraweek resistance is found at .80 and since there is no close by intraweek support, a confirmed daily close below .67 would be a negative. Probabilities favor the bulls. ZLAB generated another green weekly close (3rd in a row) and closed in the upper half of the week's trading range, suggesting further upside above last week's high at 47.34 will be seen this week. Nonetheless, the bulls did accomplish generating a failure signal against the bulls, having closed on Friday above the previous low weekly close at 43.42 (closed at 45.47). This does suggest that the bottom of this downtrend has been established and that further appreciation will be seen before any retest of the 25.74 low occurs. The chart does suggest that the 39.75 level will be that retest-of-the-low support when it does happen. Nonetheless and for that scenario to have any strength, the stock needs to continue higher, up to at least the 54.00 level before that support level is tested. The reality though does favor the bulls as there is absolutely no resistance above until 54.35 is reached. This means that this week should be "all green" for the bulls until that level is reached. Presently, intraweek support is found at 38.98. A break of that support would be a negative sign. Probabilities favor the bulls.
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1) SNDL - Averaged long at .905 (2 mentions). No stop loss at present. Stock closed on Friday at .70. 2) PRTS - Purchased at 7.02. Stop loss at 5.80. Stock closed on Friday at 6.71. 3) SRUTF - Averaged long at .0738 (3 mentions). No stop loss at moment. Stock closed on Friday at .020. 4) BTZI - Averaged long at .0935 (4 mentions). No stop loss at present. Stock closed on Friday at .0267. 5) ZLAB - Averaged long at 71.955 (6 mentions). No stop loss at present. Stock closed on Friday at 45.47. 6) AU - Averaged long at 28.423 (3 mentions). No stop loss at present. Stock closed on Friday at 24.47. 7) NEM - Averaged long at 72.62 (2 mentions). Stop loss now at 70.81. Stock closed on Friday at 82.78. 8) ENG - Averaged long at 3.378 (5 mentions). No stop loss at present. Stock closed on Friday at 1.27. 9) FSLR - Averaged long at 69.99 (5 mentions). No stop loss at present. Stock closed on Friday at 84.01. 11) SCCO - Averaged long at 72.51 (3 mentions). No stop loss at present. Stock closed on Friday at 78.17. 12) QQQ - Shorted at 368.72. Covered shorts at 370.49. Loss on the trade of $177 per 100 shares. 13) VNET - Liquidated at 6.65. Purchased at 6.61. Profit on the trade of $4 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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