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Issue #846 
January 28, 2024 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| February starts on Thursday. It is a seasonal down month!
DOW Friday Closing Price - 38109 With the exception of the RUT, all indexes once again made new all-time intraweek and weekly closing highs this week. The DOW and the SPX did close in the upper half of the week's trading range and further upside above last week's highs (DOW at 38215 and SPX at 4906) are expected to be seen this week. Nonetheless, and contrary to the previous week, the NASDAQ closed in the lower half of the week's trading range, suggesting further downside below last week's low at 17286 will be seen this week. It is of note that the RUT outperformed the other indexes, having move up 1.6% and all the other indexes moving up less (DOW .06%, SPX 1.1%, and NAZ .06%). The dichotomy in the index market this week, with the NASDAQ underperforming and the RUT over performing the other indexes, does suggest that the traders are not looking for any further upside of consequence and are leaning toward the idea that a top to the rally has (or is going to be found) this week or was found last week. Having said that, this week is going to be wholly dependent on the earnings and economic reports that are scheduled to come out. On Tuesday morning, the Consumer Confidence report comes out and after the close, GOOGL and MSFT report earnings. On Wednesday at 2:00pm, the Fed will announce their rate decision, and on Thursday morning, the ISM Index report comes out. After the close on Thursday, AAPL, AMZN and META report earnings. Friday morning, the JOBS report is given. This conglomeration of potentially catalytic reports coming out this week is going to give the traders all the information they want or need to make decisions on the direction of the market for the next 2-3 months. Most of the reports mentioned above are due to come out better than last year, with AMZN expected to show the biggest jump up from $.03 cents to $.80 cents year to year. The Fed is not expected to do anything this month and the ISM index is due a bit better (48% vs last month at 47.3%) and the Jobs claims to come down a bit from 180k (down from last month at 216k). This means that if everything comes out as expected, the bulls will not get any new ammunition with which to take the indexes even higher. The bulls need better than expected reports and the probabilities do not favor that occurring. In fact, this past week, TSLA and INTC reported lower than expected earnings and both of them fell over 10% in value. That suggests a higher probability of the earnings this week following on the same line. As far as the RUT is concerned, it did generate a successful retest of the 200-week MA, currently at 1893, and did outperform all other indexes this past week. If the top to this rally has been found and the other indexes start heading down, it is likely that the index will continue to outperform the rest of the index market. The index is not overbought, it has close by support of consequence, and if the index market has topped out, the money is likely to get into the still depressed stocks and out of the overpriced ones. As such, the index is likely to trade sideways-to-perhap up, between 1895 and 2030 (or higher) for the next 2-3 months. At this time though, no tangible sign of a top has yet been seen. Evidently and since there are no "trigger points close by below, what the bears need to see is for the indexes to head below last week's lows this week and close near or on the lows of the week on Friday. There are no chart support levels nearby that could be broken that would generate a sell sign. This week will be all about the news, and the "reaction" to the news as it is seen. This likely means that Monday and Tuesday's trading will be mostly noneventful and more likely than not, to the upside. Then again and looking at the history of big tops and bottoms from the past, the DOW usually has not gotten above the 300-point level above an even number as 38.000 is and the SPX has not gotten above 25 to a max of 50 points above an even number, such as 4900 is. Last but not least, February is a seasonal down month (2nd biggest of the year after September) and there is no reason to believe that seasonality will not occur this year. Next Friday, things should be cleared up substantially.
OIL generated a new 8-week intraweek high and in the process, gave a new short-term buy signal. This all occurred off of news that the supply and demand issue has changed in favor of the bulls. Oil closed on the high of the week and further upside above last week's high at 78.26 is expected to be seen this week. On the weekly closing chart, there is no resistance until the 79.70-80.30 level is reached. On an intraweek basis there is no resistance until 79.67/79.77 level is reached. On a daily closing basis though, there is decent and substantial resistance between 77.77 and 78.26, meaning that any daily close at least 10 points higher on Monday will generate a breakout and any daily close above a previous low daily close of note at 79.05 would open the door for a rally to the 82.23/82.36 level. A red daily close on Monday, would suggest a drop back down to 75.57 would likely be seen. The monthly closing chart, which the close for the month is on Wednesday, suggests that the trading range for the next 2-3 months is likely to be somewhere between a low of $74 and a high of $83 or perhaps as high as $86.
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Stock Analysis/Evaluation
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CHART Outlooks
MENTIONS
Z is a real estate company that made a new 23-month intraweek and weekly closing high 6 weeks ago but then 2 weeks later generated a failure signal, having closed below the previous weekly closing high at 56.33. That failure signal was then confirmed the following week. The stock closed on Friday above the 56.33 level but then only by $.20 cents and the important thing is that on a daily closing basis, the same high is 56.76 and the stock traded as high as 57.52 but then failed to close above the daily close resistance. The stock did close slightly in the lower half of the days' trading range, suggesting a slightly higher probability of going below last Friday's low at 55.75 on Monday than going above Friday's high at 57.52. If a red daily close occurs on Monday, that resistance level will have been tested successfully. If the stock closes below 55.53 on Monday, a new failure signal will be given on the daily closing chart.
Z reports earnings on February 13th and it is anticipated that they will report negative earnings (-$.33), meaning that in spite of the strong uptrend that the real estate market has been in for the past couple of years, the company has not been enjoying the fruits of it.
Z did get an upgrade in December from JPM with an upside target of $60. As such, the stock generated a spike up rally of 32% that month and closed on the high of the month, suggesting that in January, the stock would go above December's high at 59.86 and that has not yet occurred. There are only 3 days left in December and if it does not break that high in that period of time, it can be thought that the uptrend reached its rating objective and will fall back during the seasonal down period.
With the fact that Z spiked up in December, there is no support of consequence found below December's low at 50.60, meaning that any break of that level would open the door for a drop down to as low as 39.60, which is still above the level that the rally began (at 33.86).
Sales of Z above 56.70 and using a stop loss at 60.35 and having an objective of 39.60 will offer a 4.7-1 risk/reward ratio. My rating on the trade is a 3 (on a scale of 1-5 with 5 being the highest).
SCCO - Friday Closing Price - 83.20
SCCO is a copper mining company that has almost quadrupled in price over the past 8 years, having moved up from 23.50 to 87.34 (based on Monthly closes) during that period of time. Over the past 7 months, the stock has made 2 new all-time "intramonth" highs at 87.59 in July and at 88.40 in December. Nonetheless, December's monthly close was 86.07 and given that it is now trading at 83.20 and the monthly close on Wednesday is likely to be below that level, it will mean that the all-time high monthly close that occurred in July at 87.44 will experience the first successful retest of a previous high for the first time in 8 years. This would suggest that the major long-term uptrend is over. This is also supported with the fundamental fact that inflation is coming down and therefore not supporting the metals market as much as before.
SCCO dropped 12.8% during the last week of December and the first 3 weeks of January and last week it generated a rally with a high back up to 85.18. The 87.44 level was a new all-time intraweek high (on the weekly chart) and as such, a rally to test that high is likely to be in progress. The stock closed in the upper half of the week's trading range, suggesting further upside above last week's high will be seen this week. There is intraweek resistance at 87.59 that could be seen this week but a rally to anywhere near that high is an opportunity to short the stock, using an 88.50 stop loss.
To the downside, the January low at 77.14 in SCCO is support but if the retest of the all-time high is successful, that level should be broken and below that level there is no support until the $70 level is reached. That is the mention's objective but given that the stock is likely to have generated a successful retest of the all-time high monthly close, it would not be surprising if the stock drops all the way down to the 200-week MA, currently at 62.75.
Sales of SCCO above 85.18 and having an 88.50 stop loss and a $70 downside objective, will offer a 4.5-1 risk/reward ratio. My rating on the trade is 3.75 (on a scale of 1-5 with 5 being the highest).
CALM - Friday Closing Price - 56.16
CALM is an egg producing company that 13 months ago (during the high inflation period) made a new all-time intraweek high at 65.32. Nonetheless, the stock did not make a new all-time monthly closing high until March of last year and immediately the month after, that new all-time high was negated and a fall of 30% occurred during the following 6 months. In October the stock started a new rally that has now taken it from a low of 42.25 to December's high at 57.95. The stock closed on the high of the month in December but the bulls have been unable to get above that level here in January as the high so far this month has been 57.45 and with the stock closing on Friday at 56.16 and the monthly close being on Wednesday, it is unlikely that follow through to the upside will occur. This likely means that the rally has run its course. With inflation heading down and now the stock likely to show a required/needed retest of the all-time high (which has not occurred during the past 10 months, it does suggest the stock is a strong sell now.
CALM did close near the high of the week on Friday and further upside above last week's high at 56.52 is expected to be seen this week. There is established intraweek resistance between 57.49 and 57.75 that might be reached but unlikely to be broken. If the recent high at 57.95 is broken, a rally up to the $60 would then ensure. Evidently if the stock fails to break above the former, it would be a clear signal that the bulls have run out of ammunition but even if they are able to break that level, the $60 level seems like an unbreakable resistance at this time, based on the charts and the fundamentals.
To the downside and below the recent low at 53.38. there is support at 52.23 but if the recent high is not broken and a successful retest of the high on the monthly chart occurs, that level is highly likely to get broken and a drop down to $50 level will be seen. That is the main objective of the sell mention "but" if all of the above occurs (as seen on the monthly chart), that would suggest a drop down to the $44 to $47 level would be seen within the next 2-3 months.
Sales of CALM 56.52 and using a mental stop at 58.35 and having a $47 objective, offers a 5-1 risk/reward ratio. My rating on the trade is a 3.25 (on a scale of 1-5 with 5 being the highest).
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Updates
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Closed Trades, Open Positions and Stop Loss Changes |
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ENG made a new 8-week low at 1.21 but then turned around to close in the upper half of the week's trading range, suggesting further upside above last week's high at 1.49 will be seen this week. Nonetheless, the stock remains in bear market territory as it is trading below the 200-week MA, currently at 1.58. The company reports earnings on February 12th and until then, the bears are likely to stay in control. There is no established support below until the 1.00 area is reached. It is likely though, that the stock will be moving up to the 200-week MA this week and then move based on the earnings report 2 weeks after. GCI spiked up in value 12% this past week and closed on the high of the week, suggesting further upside above last week's high at 2.63 will be seen this week. Nonetheless, other than suggesting that no further downside below last week's low at 2.19 is likely to be seen, the bulls fell short of giving a definitive buy signal. The stock closed at 2.59 on Friday and on the daily closing chart, there is minor to decent daily close resistance between 2.62 and 2.66 and on the weekly chart there is short-term pivotal resistance at 2.59. This does mean that if the bulls are able to generate further green closes at the beginning of the week and end up with a green close next Friday, the chart will open up for a rally up to at least the 3.00 level, if not the 3.22 level (which was the mention's objective). A red daily close on Monday, would suggest a move back down to the 200-day MA, currently at 2.35 would likely be seen. The company does not report earnings for another 4 weeks. INTC reported less than expected earnings on Thursday night and the stock lost 12% in value and did close below the very important and pivotal weekly close support between 44.04 and 45.04, as well as below the 200-week MA, currently at 44.89. In addition, the stock generated a sell signal on the weekly closing chart, having closed below the most recent low weekly close at 46.89. This move down has changed the chart outlook for the stock, with no chance of further upside above the most recent high 51.28 to be seen without some new and positive fundamental change. The stock did close on the low of the week, suggesting further downside below last week's low at 43.35 will be seen this week. There is a lot of intraweek support between 42.04 and 42.86 that goes all the way back 3 years and that has held up on several occasions. As such, it is unlikely that area will be broken this week. A move below 41.17 though, would suggest a drop down to the $36-$37 area would occur. The bulls need to negate this week's break with a close above 44.89 next Friday. Nonetheless, the monthly close occurs on Wednesday and there is important and pivotal monthly close support between 44.04 and 44.28 that needs to hold up for the bulls to have any chance of a recovery. Indicative daily close resistance is found at 44.94 and negating-break resistance at 46.06. I will be looking to liquidate the position around the 45.00 level. JD generated a positive reversal week, having made a new 6-year intraweek low but then going above the previous week's high and closing green and near the high of the week, suggesting further upside above last week's high at 24.15 will be seen this week. The chart does suggest that a rally up to at least the $25 level will be seen this week. If that area is broken to the upside, the $30 level will become the objective. There is monthly close support at 24.50 and monthly close resistance at 25.42. Those two levels need to be watched this week. The rally came off of news that the Chinese government was stimulating the economy. Nonetheless and toward the end of the week, the details of the stimulus program underwhelmed the expectations and stocks fell back a bit and failed to generate the kind of buying interest the government wanted to generate. Having said that, at these low prices, it is difficult to see the stock continuing lower, meaning that some further recovery is likely to be seen. LXRX spiked up this week, having appreciated in value 28%. The stock made a new 6-month intraweek high and closed near the high of the week, suggesting further upside above last week's high at 1.96 will be seen this week. There was no news on the company, meaning it was all chart oriented. The stock got up and closed slightly above the 200-day MA, currently at 1.81 (closed at 1.82). This does suggest that Monday's action is likely to be indicative. A green close will confirm the break of the MA and stimulate further buying, while a red close would bring in some profit taking. The 1.90 level was the mention's objective and given that it has now been reached, means that from here on in, the action seen is going to be indicative of a longer-term outlook. The company does not report earnings for another 4 weeks. Weekly close resistance is found at 1.91. If broken, the new objective will be the 2.89 level. If not broken and a red weekly close occurs, the downside target would be the 1.50 level. Overall though, the chart has changed sufficiently so at to mean the downtrend is over and an uptrend is to begin, with the only question being the timing of the upside objectives. PLNH generated an uneventful inside week. Nonetheless, it did close slightly in the lower half of the week's trading range, suggesting a slightly higher probability of going below last week's low at .75 than going above last week's high at .88. The stock seems to be stuck in a trading range between .69 and .92 and for now there does not seem to be a breakout in the near-term outlook. There is no information as to when an earnings report is to come out. This does suggest that for now, this stock is likely to continue in this way until news about the Cannabis industry is released. Consideration should be given to liquidating the positions and looking for that money to work elsewhere, until the Cannabis industry breaks out. RBLX generated a green weekly close but nothing was accomplished by the bulls, meaning that the outlook for further downside has not changed, simply set back a few weeks. The stock did give up its early-week gains to close in the lower half of the week's trading range, suggesting further downside below last week's low at 39.15 will be seen this week. The 200-day MA is currently at 37.10 and that level is a magnet, meaning that might be the reason that it has underperformed the index market. The company reports earnings on February 7 and they are expected to be worse than last year and last year they were a minus -.48 cents. 67% of the companies in the industry the stock is in are outperforming it. This is likely the reason the stock moved lower this past week, in spite of the rally to new highs in the index market. The 200-day MA is currently at 36.99. Any daily close below 36.72 would generate further downside and perhaps of consequence. Any rally above 42.92 would negate this outlook. Last week's high was 42.35 and in spite of the new highs in the indexes, the bulls could not generate enough buying to break the downtrend in place. SIMO generated a negative reversal week, having made a new 26-week intraweek high but then closing red and on the low of the week, suggesting further downside below last week's low at 62.14 will be seen this week. The stock closed below the 200-week MA, currently at 62.66 (closed at 62.30), and if that is not negated this week, a move down to at least 58.80 will likely be seen. The company reports earnings on February 6th and that is likely to have some effect on the stock. The stock 3 weeks ago did generate a breakaway/runaway gap formation. The runaway gap has been closed, meaning the breakaway gap at 60.78 is a magnet. If that is closed, the 200-day MA, currently at 59.53, will be a magnet. Pivotal short-term intraweek support is found at 62.07, meaning that a stop loss at 61.97 can be used to limit the losses. A daily close above 63.59 would negate the short-term bearish outlook. VWDRY did not follow through to the downside and generated a green week with a close in the upper half of the week's trading range, suggesting further upside above last week's high at 9.67 will be seen this week. The gap down that was seen the previous week is at 9.71 and that gap should be closed. The upside objective for the week is the 200-week MA, currently at 9.88. What the stock does there will be a short-term deciding factor. The stock reports earnings on February 7th and that is likely to decide the direction for the next couple of months. A good earnings report would suggest a move up to the 11.23 level would be seen during this next quarter, while a bad earnings report would suggest a drop down to the 8.00 level would be seen. ZLAB generated a new 61-month intraweek low but then rallied enough to close at 22.74 and above the 56-month low weekly close at 22.72, made in August of last year. The stock closed near the high of the week, suggesting further upside above last week's high at 23.36 will be seen this week. Any daily close above 23.01 would likely be a trigger for further upside up to at least the 25.30 level. A green close next Friday would generate and indicative double bottom, especially given the fact the stock made a new 5-year intraweek low but then failed to follow though. The company does not report earnings for another 4 weeks. Any daily close below 22.40 would now be a negative. This does mean that the bulls have to generate up movement starting on Monday.
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1) ZLAB - Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 22.74. 2) ENG - Averaged long at 18.30. No stop loss at present. Stock closed on Friday at 1.35. 3) VWDRY - Averaged long at 8.67 (3 mentions). Stop loss now at 9.26. Stock closed on Friday at 9.53. 4) LXRX - Averaged long at 1.495 (2 mentions). No stop loss at present. Stock closed on Friday at 1.82. 5) GCI - Purchased at 1.93. Stop loss at 1.60. Stock closed on Friday at 2.59. 6) PLNH - Averaged long at 1.526 (3 mentions). No stop loss at present. Stock closed on Friday at .797. 8) SNDL - Averaged long at 9.05 (2 mentions). No stop loss at present. Stock closed on Friday at 1.41. 9) BORR - Covered shorts at 6.53. Shorted at 7.37. Profit on the trade of $84 per 100 shares. 10) JD - Purchased at 21.33. Stop loss is at 19.65. Stock closed on Friday at 23.86. 11) INTC - Averaged long at 38.78 (2 mentions). Stop loss now at 37.97. Stock closed on Friday at 43.65. 12) TOL - Covered shorts at 99.95. Averaged short at 103.355. Profit on the trade of $681 per 100 shares (2 mentions). 13) MMM - Covered shorts at 106.96. Shorted at 109.95. Profit on the trade of $299 per 100 shares. 14) RBLX - Shorted at 41.56. Stop loss is at 43.07. Stock closed on Friday at 40.41. 15) SIMO - Purchased at 63.90 and at 63.00. Averaged long at 63.45 (2 mentions. Stop loss at 61.97. Stock closed on Friday at 62.30.
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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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