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Issue #812 
May 7, 2023 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| All the important Earnings and Economic reports are out and the bulls have a short-term edge.
DOW Friday closing price - 33674
The first 3 weeks of the earnings quarter, including all the earning of the possibly catalytic Tech Industry companies, are now out and across the board, they were all better than expected. In addition, the important economic reports for the month, with the exception of the CPI are now out as well and all came in as expected or better. At the beginning of the week, everyone thought this rally was done, given that the indexes were falling indicatively. Nonetheless and on Friday, after the earnings report on AAPL and the economic report on Jobs had came out, the bulls once again found their stride and the indexes rallied to close out the week/month is the upper half of the trading ranges, suggesting that the bulls have the edge for now.
The picture remains clouded as inflation (and the Fed's response to it) remains a negative. As such, the same as was seen in April is likely to happen in May. April was supposed to be a seasonal up month but the only index that closed green was the NASDAQ and then it was green by only .001% (14 points). I would not be surprised if something like that happens in May (supposed to be a seasonal up month as well).
Nonetheless and for this coming week, the bulls have the edge. They rallied strongly on Friday after the earnings of AMZN, GOOGL and AAPL, as well as the Jobs report came out and that will give them ammunition to start the week on a positive basis. There is only one report that is scheduled for this week that could be somewhat catalytic and that is the CPI number that comes out on Tuesday. The expectations are for a .3% inflation number and given that last month it came out at .4%, if it comes out as expected, it is likely to give the bulls a bit more ammunition. Anything higher than .4% would be a negative. It is not expected that it will happen. As such, the probabilities favor the bulls taking the indexes higher.
With all the important earnings and economic reports out, the traders will key on the charts this week and the indexes do show some chart resistance levels that are short-term pivotal. In the DOW it is at 34712, in the SPX it is at 4325, and in the NASDAQ, it is at 13720. If those levels are broken, a new game will start. Nonetheless, those levels will be magnets for at least testing them, meaning that there is room above for higher prices, though limite in scope overall.
Having said that, it is highly unlikely those levels will be broken this month. To begin with, June is a seasonal down month and to finish it off, most of the fundamental analysts expect that some form of recession will begin in July. Putting both of those together, I would venture to guess that May will end up being much like April was but on the opposite side, meaning some strength will be seen for the next 2-3 weeks but then selling interest will come in toward the end of the month. In addition, April did not turn out to be anything special (as far as trading range or end results), meaning that May could be the same.
As far as support is concerned, April's lows will be pivotal support at this time. In the DOW it is at 32937, in the SPX it is at 4048, and in the NASDAQ, it is at 12938. I mention these supports not because I expect them to be "in play" this month but as information as to have just in case something unexpected occurs.
For now and for the week after, I do expect to see a bias to the upside but then again a cautious bias as the fundamental outlook for the economy and for inflation (and what the Fed will do) remains overall bearish for the midterm.
OIL had a wild week, having made a new 19-month intraweek low and generating a $13 trading range (63.70-76.69). Weirder and wilder is the fact that in the end, Oil closed in the middle of the week's trading's trading range, leaving the door open for both the bulls and the bears to break above or below either of those levels this week. It is unlikely that either will happen this week, suggesting it will be an inside week that will be relatively uneventful. In looking at the daily and weekly closing charts though, the action seen does favor the bulls (by a little). On a weekly closing basis, Oil closed at an important support at 71.50, having closed at 71.34. A green weekly close next Friday will be a short-term positive as it will mean that the multi-month weekly closing low at 66.74 will have been tested successfully. No such retest has occurred since that low was made. On the daily closing chart, a successful retest of that same level was made this week, given that Oil closed on Thursday at 68.60 and then had a green close at 71.34 on Friday. This does suggest that the bulls have now been able to build an area of support (on the daily closing chart) that is beneficial to the bulls. The same will happen on the weekly chart if a green close occurs next Friday. Given the fundamental scenario in place, I would say that the probabilities favor the bulls. By the same token, this move down has taken away quite a bit of short-term ammunition away from the bulls, suggesting that Oil will now have short-term decent resistance between $79-$80 for at least the next 3-6 weeks, or until some new fundamental news or change is announced. A trading range (on a daily closing basis) between $70 and $80 is now highly probable.
DOLLAR, based on a weekly closing basis, has had 4 totally uneventful weeks in a row, having closed at 101.55, at 101.82. at 101.67 and on Friday at 101.28. Nonetheless and having said that, the Jobs report on Friday was not helpful to the Dollar as it had a negative reversal day that caused it to close on the low of the week, suggesting further downside below last week's low at 101.03 will be seen this week. On a negative note, the Dollar did make a new 56-week weekly closing low, meaning that the weekly close support at 101.67 now has been broken, the break retested successful and now a new low made. Such chart action requires a positive fundamental piece of news to change and that does not seem to be in the cards for at least another 4 weeks. The $100 level is now highly likely to be seen. By the same token and on intraweek basis, the Dollar could drop as low as $98-$99. A daily close above 102.23 would change the outlook a bit.
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Stock Analysis/Evaluation
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CHART Outlooks
The important earnings and economic reports for the month are now out and it seems that the bulls were able to gather an edge for May. Nonetheless, an edge is all that was achieved, meaning that it is more of a traders market than a trend market. I have found 3 new stocks with charts that strongly suggest these stocks will move up during the next few weeks. As such, those are the new mentions given. In addition, several of the held stocks also show clear probabilities of moving up during this period of time and as such, review the Held Stock section for information as to what could be traded (in a purchase scenario) during the next few weeks.
Nonetheless, the threat of a recession and some kind of a downtrend has not gone away and will be overhanging the market every day and as such, having a short position here and there (as protection) should be considered. I have also included a new short trade, to be used if the desired entry point is reached
PURCHASES
ANGO Friday Closing Price - 8.72
ANGO is a stock in the medical business. It is a stock that got as high as $32 just 19 months ago but did get back down near the all-time intraweek low (19-year low made in 2020) at 7.54, having dropped down to 8.18 the previous week. On the weekly closing chart, the stock now shows not only a successful retest of the all-time weekly closing low at 8.26 but also a double bottom, given that it closed at 8.32 the previous week and did generate a green weekly close on Friday.
In looking at the fundamental outlook for ANGO, I did find nothing but buy mentions with a $13-$15 objective. This means that fundamentally, the stock should not go lower.
ANGO closed near the high of the week on Friday, suggesting further upside above last week's high at 8.90 is expected to be seen this week.
ANGO reported earnings on March 30th and did report lower guidance. The report caused the stock to gap down from 12.40 to 10.26. A recovery rally occurred the day after with an intraweek high at 10.84 occurring but then the stock got into a straight down trend that did not end until 8-trading days ago with the 8.18 level being reached. After that, the stock bounced up to 8.90 and then dropped back to Thursday's low at 8.39, followed by a higher high on Friday and a green close. This means the 8.18 level now shows a successful retest of it and if 8.90 is broken, there is literally open air above to 10.84. If the rating companies have it right, the stock should close the gap up at 12.40. The chart suggests that if the 3-month high at 12.70 is broken, a rally up to the 200-week MA, currently at 15.12 would likely occur.
Purchases of ANGO between 8.60 and 8.72 and using a stop loss at 8.08 and having a minimum objective of 10.84 offers a 3.3-1 risk/reward ratio. Nonetheless, closure of the gap at 12.40 is a viable objective, meaning the risk/reward ratio would be almost 6-1. My rating on the trade is a 4 (on a scale of 1-5 with 5 being the highest).
ATNI Friday Closing Price - 36.74
ATNI is a telecommunications company that has been in existence for 32 years. The initial breakout occurred in 2001, when the stock broke above its 10-year trading range below $10, and from there and over a period of 16 years, it rose to an all-time high at 68.78. Since 2017 though, the stock has mostly gone down and 14-months ago, it got back down to 32.07. From there and over a period of 5 months, a recovery rally occurred that took the stock back up to 50.45. The stock then went down for the following 8 weeks, ending up with a low at 34.74, before turning back up again. That 34.74 low was considered a successful needed/required retest of the low at 32.07. Once again, the stock rallied over the next 16 weeks to a high at 50.27, which it was where the 200-week MA was then at, and the rally ended. This story shows that the stock remains in an overall downtrend but that presently it is on a midterm sideways trend.
ATNI made a new 30-week low last week at 35.05 and then generated a positive reversal and a close in the upper half of the week's trading range, suggesting that the stock now is likely to show 2 successful retests of the 32.07 low with the previous low at 34.74 and last week's low at 35.05. With the index market likely to have an upward bias for the next few weeks, this chart of this stock suggests that at the very minimum, a retest of the most recent high at 43.07 is to occur. If that high is broken by any chance, another retest of the 200-week MA, currently at 48.44, would then likely occur. As such, the upside objective of this mention is 42.22 with an outside possibility of 48.44.
As far as the desired entry point into a purchase of ATNI, the stock got up to the 200 10-minute MA, at 36.75 on Friday but was unable to break above the line (line has not been broken for the past 16 trading days), meaning the first course of action for the week is likely to be to the downside, to build support on the intraday chart. A drop down around the 35.91 level is expected to be seen and will be the desired entry point (around 36.00). As such:
Purchases of ATNI around the 36.00 level and using a stop loss at 34.95 and having a 42.22 objective, offers close to a 6-1 risk reward ratio. My rating on the trade is a 4 (on a scale of 1-5 with 5 being the highest).
LXRX Friday Closing Price - 3.49
LXRX is a pharmaceutical company that has been around for 16 years. It is a stock that for the most part has traded in an overall downtrend, given that the all-time high at 28.21 was made in the first 6 months of trading and since then the stock has been generally trading lower, having made its all-time low at 1.03 in November 2020. By the same token, the stock has shown more sideways trading than not, given that for 10 years it traded mostly between $6 and $18 and since the breakdown of the previously established low at $6, which occurred in Nov 2020, it has mostly traded between $1.20 and $6.
Having said all of that, the stock reported earnings on May 3 and they were better than expected and in addition, reported guidance for the near future that was also better than expected. As such, LXRX immediate made a new 17-week high and closed on the high of the week, suggesting further upside above last week's high at 3.79 will be seen this week. In addition, the stock closed convincingly above the 200-week MA, currently at 3.17, meaning that the breakout does seem to have "legs" to it.
In looking at the chart of LXRX, there is open air to the $6 level and given the story of that level being a major pivot point area for the past 14 years, reaching that level has a high degree of probability. In simple words, it is a magnet that may end up deciding whether the stock remains in a sideways trend of whether even more of a recovery could be seen.
As far as support is concerned, LXRX made a new 16-month daily closing high on Friday, breaking above the previous high daily close at 3.43. In addition and going back to July 2021, the chart shows intraweek support at 3.26, suggesting that if the news (and rally) is to be believed, those 2 levels will not be broken. As such, the stop loss should be placed at 3.16. I would make it a mental stop but two closes below 3.43 would be a negative. To the upside, the objective of the mention is 6.06. There is intraweek resistance at 5.33 that is clearly defined and could stop the rally, but the $6 level is somewhat of a magnet. There also resistance at 6.33 that will be in play at some point. I do need to remind you that with a better earnings report and good guidance, it is possible that the stock could go higher and if the 6.33 level is broken, the 8.40 level would be the objective.
Purchases of LXRX around the 3.45 level and using a stop at 3.13 and having a minimum objective of 5.33, offers a 6-1 risk/reward ratio. My trading on the trade is a 4 (on a scale of 1-5 with 5 being the highest.
SALES
TNC Friday Closing Price - 78.31
TNC is an international company that offers floor cleaning equipment. It is a stock that has been trading for 15 years. It is a stock though, that has mostly been a tradeable stock, given that for the past 5-years, it has traded mostly between $50 and $85, with the stock having been up to the highs of that range a total of 5 different times and near the low of that trading range, 5 times as well. Simply stated, it is a "trading" stock and not a buy and hold stock.
On a potentially negative note, TNC reported earnings on April 28th and they were better than expected and the stock rallied from 64.88 to 80.52. The earnings report did cause one rating company to give a buy signal with a $100 objective.
Nonetheless and under the scenario presently facing our economy, it is unlikely that a new high will be made, meaning that the $85 to 87.40 (all-time intraweek high) area is likely to stop the rally. On a daily and weekly closing basis, the 85.35 area is "it", as far as resistance is concerned.
To the downside, the mention's objective will be the 70.42 level, which is where the 200-week MA is located. If the country does go into recession this July, a drop down to that level would likely occur.
I do see TNC getting up at least to the $82 and perhaps even as high as $84, with a small possibility of getting to $85. The stop loss will be placed at 85.43, meaning that if entry point is the 82.00 level and the objective is 70.40, the risk would be about $3.40 and the profit potential about $11.60, meaning at least a 3.3-1 risk/reward ratio. My rating on this trade is 3.25 (on a scale of 1-5 with 5 being the highest).
It is doubtful that the stock will get to the desired entry point this week, meaning that this is a standing mention for whenever the stock gets to the desired entry point. In addition, I am also giving this mention as protection against this market turning down because recession talk increases.
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Updates
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| Updates on Held Stocks |
Closed Trades, Open Positions and Stop Loss Changes |
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BABA generated another red week (the 4th in a row) and did get down near to the pivotal intraweek support at 79.48 with a low last week at 80.49. Nonetheless, the stock closed in the upper half of the week's trading range, suggesting further upside above last week's high at 85.28 will be seen this week. If that occurs, last week's low will become the required/needed retest of the 79.48 low and it will also be the 3nd successful retest of the multi-year low at 58.01. If all of that happens and the bulls are able to get above an indicative resistance at 94.98, the bottom support formation will be fully built and the bulls will likely step up in a big way. Above 94.98 there is no resistance until 104.85/105.05 is reached and if that level is broken, $118 would be "around the corner". Evidently, the 79.48 is pivotal support. ENG generated a 2nd green weekly close in a row and did close on the high of the week, suggesting further upside above last week's high at .4589 will be seen this week. More importantly, the gap down seen after the earnings report that was at .458, has been closed, meaning that a big amount of chart ammunition for the bears has now gone away. There is some minor daily close resistance at .47 but on an intraweek basis, there is no resistance until .58 (somewhat minor as well). If that level is broken, there is open air to .7488. Daily close support is now found a .40 and at .37. Those levels should no longer be broken if this recovery rally is real. LI generated a second green weekly close in a row and did close on the high of the week, suggesting further upside above last week's high at 24.21 will be seen this week. The green weekly close means that the previous week's low at 21.48 is now the 4th successful retest of the multi-year low at 12.52, which in turns gives the bulls more ammunition to continue upward. The chart is showing a bullish pyramid formation that is confirmed with a break above the most recent high at 26.27, would offer an objective of 36.46. The next resistance above is 25.93, which should be this week's upside objective. Evidently, the 21.48 low is now pivotal, meaning the stop loss can be raised to 21.38. PLNHF generated a positive reversal week, having made a new 19-week low but then closing green and near the high of the week, suggesting further upside above last week's high at .78 will be seen this week. The stock generated a daily close at the previous daily closing high, meaning that a green close on Monday would generate a new buy signal. An intraweek rally above $.82 would be a short-term breakout that would mean a bottom to the downtrend has been built and retested successfully. A drop below last week's low at .67 would weaken the chart. SNDL generated a small breakout this past week, having made a new 2-month intraweek and daily closing high. The stock closed on the high of the week and further upside above last week's high at 1.75 is expected to be seen this week, There is open air above to 1.92 level (minor). The previous low daily close support of importance is at 1.99. A close above that level would mean the downtrend is over. Daily close support is now at 1.60. The stock should no longer close below that level, or it will weaken the chart once again. TCEHY generated a totally uneventful week, with neither the bulls nor the bears able to make any "noise". Nonetheless, the stock did close in the upper half of the week's trading range, suggesting further upside above last week's high at 44.72 will be seen this week. If that occurs, there is open air above to 47.37. The 50.18 level remains pivotal resistance. The 42.05 is short-term pivotal support and the 39.34 level is midterm pivotal support. VET made a new 29-month intraweek low but the bears were unable to confirm the break, given that the stock closed above the 12.11 level, which was a close made 8 weeks ago. The stock closed on Friday at 12.54. In addition, the stock closed near the high of the week, suggesting further upside above last week's high at 12.73 will be seen this week. On a daily closing basis, the stock did generate a new sell signal on Tuesday but the sell signal was negated on Thursday and the negation confirmed on Friday with another green daily close. This action does suggest that the bulls dodged a bullet and that some recovery is to be seen. Pivotal intraweek resistance is a 13.99. Intraweek support is now once again found at 11.93, that should not be broken anymore if the bulls are to make this recovery real. ZLAB generated a classic positive reversal week, having made a new 6-week intraweek low and then closing above the previous week's high at 36.98 (closed at 37.65). The stock closed on the high of the week, suggesting further upside above last week's high at 37.84 will be seen this week. On a possible negative note, the stock gapped up on Friday from 35.48 to 35.94 and if that gap is to remain open, another gap up has to occur on Monday. As it is, the stock closed above the 200-day MA, currently at 37.23 and to confirm that breakout, the stock has to generate another green close on Monday and to confirm all of this (break of the MA and a breakaway/runaway formation), the stock has to get above 40.42. If all of that happens, it will be strong bullish sign that would open the door for a rally up to the $70 objective. Any daily close below 34.67 would give the edge back to the bears. Overall though, and based on the charts and the action seen the past 14 months, it does seen that the stock is ready for some strong moves to the upside.
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1) ZLAB - Averaged long at 71.955 (6 mentions). No stop loss at present. Stock closed on Friday at 37.65. 2) ENG - Averaged long at 2.876 (6 mentions). No stop loss at present. Stock closed on Friday at .44. 3) RBLX - Covered Shorts at 35.05. Shorted at 43.72.Profit on the trade of $868 per 100 shares. 4) AMRX - liquidated at 1.88. Averaged long at 1.7025. Profit on the trade of $71 per 100 shares (4 mentions). 5) IR - Covered Shorts at 58.45. Averaged short at 56.745. Loss on the trade of $341 per 100 shares (2 mentions). 6) VET - Purchased at 11.43. Averaged long at 14.956 (3 mentions). No stop loss at present. Stock closed on Friday at 12.54. 7) TXT - Covered shorts at 66.00. Shorted at 68.96. Profit on the trade of $296 per 100 shares. 8) BABA - Averaged long at 85.05 (3 mentions). No stop loss at present. Stock closed on Friday at 83.22. 9) SHOP - Shorted at 59.. Covered shorts at 59.45. Loss on the trade of $49 per 100 shares. 10) LI - Purchased at 22.72. Averaged long at 22.125. Stop now at 21.38. Stock closed on Friday at 23.93. 11) TCEHY - Purchased at 43.23. Stop loss at 41.95. Stock closed on Friday at 43.90.
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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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