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Issue #897 
February 2, 2025 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Outlook Still Unclear, but Bears Gain an Edge.
DOW Friday Closing Price - 44544 The 2nd week of the Trump administration did not generate any clear answers to the questions being asked. The earnings and economic reports were mostly positive, and the bulls tried to make a statement, but no statements were made. The DOW came within 19 points of making a new all-time intraweek high "on Friday" and was trading above the all-time high weekly close,but then ended up closing 515 points below the high at the end of the day and 366 points below the all-time high weekly close. The SPX did the same thing, having gotten within 7 points of the all-time intraweek high on Friday, and trading 30 points above the previous all-time weekly close and 19 points above the previous highs all-time weekly close breakout, but then ended up closing 80 points lower and generating a failure signal against the bulls. The NASDAQ, who has been lagging the index market for that past few months and early in the week got a lot of selling interest due to the announcement that a Chinese company was offering AI at much cheaper prices than the American companies offer and that strongly affected the AI companies in the index (NVDA dropping 16% in value), generated an 872 point rally from the low of the week but then failed to break the previous successful retest of the all-time intraweek high at 21945. More importantly, the index traded on Friday 165 points above the all-time high weekly close but then closed red and 368 points below the high, meaning that the index now shows a double top on the weekly closing chart at 21780/21776. If that double top gets confirmed, the bears will jump aboard in a big way. Bottom line is that the bulls have now failed the last 2 weeks and given that Trump has been extremely busy signing executive orders that are highly controversial and that carry the possibility of ether strong benefits or consequences occurring over the next couple of months, the action seen this past week suggests that the traders (now seeing the failures that have occurred the past 2 weeks) will begin to lean toward the consequences being the end result. The failures seen this past week will need to be confirmed before the bears jump in strongly. That may not happen easily or this week because the ISM Index and JOBS reports come out, and they are always important and always used by the traders to move the markets. Nonetheless, those reports do not hold as much importance this time as in other times, so they may not be indicative. As such, here are the levels of resistance and support that are involved this week that could (and likely will) trigger action. In the DOW and on a daily closing basis, there are 2 levels to watch. To the upside, the 44882 level has some meaning as it was the high daily close this week. Nonetheless, the 45013 level is the all-time high daily close, which if broken would negate the action seen this week and give the bulls fresh ammunition. To the downside, the 44293 level has meaning. A close below that level would generate a "small" but likely indicative failure signal against the bulls. With the index closing on Friday at 44544, the downside support is very reachable. In the SPX, the two levels to watch are 6090 and 6020. In the NASDAQ, there are 4 levels that have meaning. They are 21558 and 21772 and then to the downside, at 21127 and 20975. None of these 4 levels are pivotal but they are indicative with the higher and lower numbers meaning more than the inside numbers. All indexes closed nearer to the lower numbers than the higher numbers, meaning that the bulls have more to prove than the bears. The reality right now is that the traders are keyed on Trump and his actions, and what he did this past week was not market-positive. Deporting so many illegal immigrants is costly and firing judges, prosecutors and Federal people is going to bring disarray to the nation and disarray is never a positive to any economy. As such, the bulls need some positive catalyst while the bear don't need any of that. This was the direct result of the action seen last week. HSI index had a very short week as it was closed on Wednesday, Thursday and Friday. As such, not much indicative action occurred. Nonetheless, the index did generate a buy signal on both the daily and weekly charts that will need to be confirmed this week. If that happens, then the traders will be more comfortable with the buy signals and will jump in, in a stronger way. The thing to watch this week are the levels where the buy signals were given as breaking those levels will take away the small edge they presently have. On a daily closing basis, any confirmed daily close below 20106, will likely bring about further downside of about 400 points. On the weekly closing chart, the level is 20009. A close below that level would bring about a drop of about 450 points. The Index closed the week at 20225. There is a lot of potential room to the upside but this week is likely to be mostly about confirming last week's positive action.
GOLD(Apr 2025 chart) made a new all-time high across the board and did close in the upper half of the week's trading range, suggesting further upside above last week's high at $2872 will be seen this week. The key chart levels have changed slightly as now it is the April (not the February) chart that is in effect. Gold has now clearly resumed the uptrend and the fundamental picture at this time does suggest that the trend is likely to continue. Nonetheless, Gold has now had 5 green weeks in a row and it is possible (not necessarily probable) that a retest of the previous daily closing high at $2800 will be seen this week. The daily chart does have a slightly higher probability of seeing a retest than the weekly closing chart, as that level is at $2749 and at this time, that kind of a fall is not likely to be seen. Having said all of the above, there is very little chance of Gold having any fall of any consequence at this time. From a purely common sense chart point of reference, the $3000 level beckons and based on the fundamental picture, that level could be seen very soon. To the downside, only a daily close below $2741 or a weekly close below $2749 will change the outlook. OIL confirmed the failure signal against the bulls that was given last week, having generated another red weekly close and a close near the low of the week, suggesting further downside below last week's low at 71.94 will be seen this week. The fundamental picture at this time does not favor the bulls but it also does not favor the bears for much further downside. The prices of Oil have come down because Trump has asked OPEC to keep the prices down by increasing production, so inflation can come down as well. Nonetheless, it is unlikely that OPEC will increase production, given that at these prices, it would be counter-producing. On a chart basis and looking at the weekly closing chart, there is decent weekly close support at 71.23 and on the daily chart, there is also support there but further support at 70.62. To the upside and on a weekly closing basis, there is decent resistance at 75.56 and that same resistance on the daily closing chart is at 76.47. As such, it is highly probable that Oil will be trading between $71 and $76 until some fundamental change occurs.
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Stock Analysis/Evaluation
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CHART Outlooks
The overall market is now leaning toward some further downside. Over the past 2 weeks and in the new presidency, the bulls had the chance to make a statement but they have failed, suggesting that for now, some downside will be seen. The buy mentions given last week did not reach the desired entry points but both of the mentions have their own positive outlooks that are not likely to be affected by any weakness in the index market, meaning they remain viable but only at the desired entry points.
For this week though, I do believe that shorting hand-picked stocks is the way to go. I did find 2 stocks to short and those will be this week's mentions.
SALES
TXN Friday Closing Price - 184.61
TXN is an American semi-conductor company in the Tech industry but it is considered to be overvalued and losing market support. In addition, it has been said that their drivers have an ill-defined growth rate that does not help the stock for future growth.
TXN made a new all-time intramonth high 4 months ago at 220.39 and a new all-time high monthly close 8 months ago at 214.34, above the previous all-time monthly close at 192.37. Nonetheless, in December the stock generated a failure signal, having closed at 187..51 and that failure signal was confirmed on Friday with a monthly close at 184.51. This does suggest that the stock has more downside to come over the next couple of months.
TXN made a new 37-week intraweek low last week but did get down to the 200-week MA, currently at 179.29, with a drop down to 179.61 and generated a bounce to close very slightly in the upper half of the week's trading range, suggesting a very slight higher probability of going above last week's high at 190.09 than below last week's low at 179.61. Nonetheless, if the stock goes below last week's low and closes below the 200-week MA, more selling interest will occur. If it goes above last week's high, a bit more upside to the $195-$197 level could be seen. As such and with no "short-term" clear picture, this mention could be a two-step process. Either way, this stock is a short).
To the downside and if the 200-week MA is broken, the TXN chart clearly suggests that a drop down to the $160 level would likely occur. That will be this mention's objective.
In looking at the 10-minute chart, the stock is trading at the 200 10-minute MA, currently at 184.15. As such, selling TXN at Friday's closing price is the desired entry point. There is clear short-term pivotal resistance at 190.09 (last week's high, meaning that the stop loss on this trade will be at 190.35. Nonetheless, if that level is broken, the stock is still a short but it would likely get up to $196, where once again the stock would be a short, using a stop loss at 200.75. With the first trade, the risk reward ratio is 4-1 and on the second trade (if the first trade stop loss is triggered and the loss taken, the 2nd trade offers a 6-1 risk/reward ratio. My rating on the first trade is 2.75 and on the 2d trade it is 3.75 (on a scale of 1-5 with 5 being the highest).
This stock is a short but the chart is not clear as to whether the stock will be breaking the 200-day MA this week or whether that will happen 2-4 weeks from now, after a rally to $196 occurs. This is the reason I gave the potential two-step scenario. I will be shorting TXN this week but my chances of getting stopped out are almost a 50-50. If stopped out though, I will re-short at the higher level and that trade has an 80-20 chance of being successful.
QTWO Friday Closing Price - 95.17
QTWO is a cloud-based digital solutions company that caters to the financial industry. The stock had been on a major uptrend for 23-months from an 18.61 low to a high seen in December at 112.82. During 14 months, each monthly low was higher than the previous one, meaning the stock got into runaway-freight train scenario. There are close to 20 rating companies and 12 of them still rate the stock a buy and 8 of them rate the stock a hold. No one rates the stock a sell. Having said that, the chart rates the stock a high probability short/sell but only if the desired entry point is reached.
QTWO made its all-time high at 148.54 in 2021, then dropped 87% in value and then rallied 600% (in value) in what is seen as a recovery rally. Nonetheless, Jim Cramer rates the company a "relic", meaning that there is a good possibility this recent 112.82 high is a top to the rally. The stock generated a negative reversal month in December and another red month in January and from high to low of these 2 months, a 23% drop has occurred.
QTWO's rally was impressive and there has been no tangibly negative news, meaning that before any traders actually consider shorting the stock the recent high needs to be tested. As such, this trade at this time is purely chart oriented. The stock closed in the middle of the month's trading range, meaning equal chances of either going below last month's low at 86.56 or going above last month's high at 103.17. Going above last month's high would open the door for the required/needed retest of the 112.82 high, which in turn would open the door for the traders to short the stock with a clear and pivotal resistance level above, where a very good risk/reward short trade could be instituted.
In looking at both the monthly and weekly chart, the downside object of this trade would be at least 64.10 but easily the stock could get down to the $60 level "and" still be in a long-term uptrend. In looking for a desired entry point, the daily chart suggests that the $105 level is a clear objective if the bulls still have control As such, the desired entry point will be anywhere close to that level.
As such, the desired entry point is around $105, the stop loss point is at 112.92 and the objective is at least $64. This means this trade offers a 5-1 risk/reward ratio. My rating on this trade is 3.5 (on a scale of 1-5 with 5 being the highest).
This mention on QTWO is exclusively a chart trade but as such, it is viable for anytime this month (not just this week). Entering this trade above last month's high at 103.17 is the only requirement. Otherwise, no trading of the stock makes sense.
PURCHASES
PRAA Friday Closing Price - 22.11
PRAA is a financial services company that works with non-performing loans. With Trump keying on economics, the outlook for this company is positive. The stock broke down in May 2023, having broken a long standing monthly close support at 24.14 and dropped down to 12.31 (all-time low monthly close) in October 2023. It then bounced back up to 26.20 and has since shown 2 other monthly closes at 26.08 and at 26.65. Those 3 monthly closes were all above the 24.14 monthly close support, meaning that failure signals against the bears have occurred on 3 different occasions. It also means that there is a triple top in that $26 area and that is a magnet for breakage occurring.
During the past 14 months, PRAA has set up 2 monthly close support levels at 19.66 and 20.16, which means that the 12.31 low has now been tested successfully twice and given that the monthly close is this Friday and the stock is trading at 21.72, the chart suggests it is a good purchase this week. On an intraweek basis, the stock shows a double low at 18.64/18.71 and the stock is having a positive reversal month, having gone below last month's low and now trading green and near the high of the month. If the stock goes above this month's high (so far at 22.02, it will mean that this month's low at 19.17, will become the needed/required retest of that double low, and that will give the bulls new ammunition and also suggest that the chart is built for a rally.
To the upside and using the same monthly chart, the objective is the 200-month MA, currently at 33.23. The 200-week MA is currently at 31.59 and that is certainly a magnet should all these chart support building is valid. >
On a fundamental basis, there are 6 rating companies following PRAA and 2 of them rate the stock a hold, 3 of them rate the stock a buy and 1 of them rates the stock a strong buy. None have the stock as a sell.
To the downside and looking at the daily chart, PRAA got up to the 200-day MA on Friday (currently at 21.99) and a drop back to somewhere between 20.26 and 20.70 could be seen sometime over the next 2 weeks. That will be the desired entry point. Using the same daily chart, a break below 19.17 would take away the advantage that the bulls have presently gained, meaning that the mental stop loss will be at 19.07.
Purchases of PRAA below 20.70 and using a stop loss at 19.07 and having a 31.59 objective, will offer a 6-1 risk/reward ratio. My rating on the trade is 3.75 (on a scale of 1-5 with 5 being the highest).
TNC Friday Closing Price - 85.52
TNC is a floor cleaning company and as such, not likely to be affected much (in either direction) by the Trump administration. On a fundamental basis, the rating companies have rated the stock a buy, with an upside target of $125-$135. The charts at this time do not suggest that objective can be reached in the short-term but the $110 level can.
In looking at the monthly closing chart, TNC traded below the 82.74 level for a period of 6 years, having seen 4 high monthly closes at 81.35, at 82.74, at 81.04 and at 82.43. That area got broken to the upside in November 2023, taking the stock up to the all-time high monthly close at 121.61. Upon reaching that level in March 2024, the stock got into a correction/retest of the breakout level. In December, the stock closed at 81.53 and now here in January and just 5 days away from the monthly close, the stock is trading at 86.50, suggesting that the breakout level will have been tested successfully, and that a recovery rally, or a resumption of the uptrend has begun.
TNC is generating a positive reversal month, having made a new 14-month low and now trading green and likely to close on or near the high of the month, suggesting further upside above this month's high (presently at 87.67) will be seen in February. It must be stated that the for the past 6 months, each high has been lower than the previous month, meaning there is no intramonth resistance on the monthly chart until the 110.45 monthly high (seen in July) is reached.
In looking at the weekly chart, TNC got down to the 200-week MA, currently at 80.41, 7 weeks ago and traded at the line without breaking it, for a period of 6 weeks. The stock made a new 7-week intraweek high this week, meaning the retest of that line is now confirmed as successful. Having said that, the 79.73 intraweek low seen 3 weeks ago, has not yet had a successful retest and that means that until that occurs, the stock id not a buy. The chart suggests that a drop down to at least 84.55 but more likely down to 82.54, will be seen at some point over the next week or two. That area is the desired entry point.
As stated above, TNC does not show any resistance on the monthly chart until 110.45 is reached. Nonetheless, on the weekly chart, there is intraweek resistance at 93.03, and at 98.52. The 200-day MA is currently at 95.98 and that line is not likely to be broken until the earnings report comes out on February 27th.
Purchases of TNC between 84.55 and 82.54 and using a stop loss at 79.63 and having a 110.45 objective offers a 5-1 risk/reward ratio. My rating on the trade is 3.75 (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 2023, as of 1/1 Profit of $0 using 100 shares per mention Closed out profitable trades for January per 100 shares per mention
NONE
Closed positions with increase in equity above last months close.
IBM (short) $1119 Total Profit for January, per 100 shares. $2750 Closed out losing trades for January per 100 shares of each mention.
NONE
Closed positions with decrease in equity below last months close.
JD (long) $160 Total Loss for January, per 100 shares $163 Open positions in profit per 100 shares per mention as of 2/1
FSLR (long) $888
Open positions with increase in equity above last months close.
ZLAB (long) $700 Total $1,588 Open positions in loss per 100 shares per mention as of 2/1
NONE
Open positions with decrease in equity below last months close. BCTX (long) $42 Total $42 Status of trades for month of January per 100 shares on each mention after losses subtracted.
Profit of $4,133
Status of account/portfolio for 2025, as of 1/31Profit of $4,133 per 100 shares.
AXP generated a red week, suggesting that some correction may have started. Nonetheless, the stock closed slightly in the upper half of the week's trading range, suggesting a higher probability of going above last week's high at 321.89 than going below last week's low a 310.72. By the same token, the all-time intraweek high is at 326.27 and if the stock does go above last week's high but does not make a new all-time high and a red close occurs on Friday, it would suggest that perhaps a top (or at least a temporary one) has been built. On a weekly closing basis, there is no support until 304.68 is reached and if the overall market is ready to have some downside of any consequence, the stock is likely to see more downside than simply retesting the previous but not yet established all-time high weekly close at that price. That area between $304 and $305 is short-term pivotal, meaning that a retest of that level is a high probability. Any daily close above 325.87 will give further ammunition to the bulls. BCTX had a 15-1 reversal split as the stock needed to be above $1 in order to continue trading in the NASDAQ index. As such and considering the new price, the stock closed on Friday at 5.02 (meaning at .332), which is actually a new all-time low. There is no established support below but on a "psychological" basis, the $5 level (4.70-5.30 - demilitarized zone) is considered a decent support area that should not be broken. The 6.09 area (previously .42) is the pivotal resistance area now. BTZI made a new 9-week weekly closing low and closed on the low of the week, suggesting further downside below last week's low at .007 will be seen this week. Nonetheless, the previous weekly closing low was .0072, meaning that the break of support is very minor and not likely indicative. As it is, the previous week, the stock took an intraweek plunge to .0001 and that plunge needs to have a successful retest, meaning a drop below last week's low and then a rally above this week's high next week. In looking at the daily chart, a daily close below .0053 would be negative and a daily close above .009 would be positive. FSLR made a new 10-month intraweek low at 158.08 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 171.50 will be seen this week. This company continues to be rated a strong buy by quite a few rating companies, with the lowest upside target price of $237. On a daily closing basis, a close above 176.24 would generate a failure signal against the bears. On a weekly closing basis, there is resistance at 172.38. Last week's low daily close at 160.24 is now short-term pivotal support. LXRX failed to confirm last week's buy signal, having closed on Friday below the previous high weekly close at .81 (closed at .75). This does take away the ammunition that the bulls gained the previous week but does make the previous week's close at .99 and the previous low weekly close at 1.01 into a highly indicative and pivotal resistance area, which if broken would strongly suggest the bottom to this correction is over. In looking at the daily closing chart, the stock remains in an up channel that already shows 2 successful retests of the multi-year daily closing low at .65. The most recent retest daily close low is at .692, meaning that if that level is not broken this week and a green daily close occurs there will be 3 successful retests of the low, giving the bulls more ammunition. This scenario is the most probable. VWDRY generated a green weekly close and closed in the upper half of the week's trading range, suggesting further upside above last week's high at 4.70 will be seen this week. The stock did generate a buy signal on the daily closing chart, having made a new 4-week high daily close above 4.54. The stock closed at 4.53 on Friday and if the bulls want to make a small but short-term indicative signal, a green daily close on Monday needs to occur. Any daily close above 4.67 would give the bulls new ammunition. Any daily close below 4.25, would give control back to the bears. ZLAB made a new 8-week intraweek high and closed slightly in the upper half of the week's trading range, suggesting a higher probability of going above last week's high at 28.24 than going below last week's low at 25.88. The stock did generate a buy signal on the weekly closing chart, having closed above the 8-week high weekly close at 26.72. The same occurred on the daily chart but the level there was 26.89. The stock generated a red daily close on Friday at 27.19 and if the bulls can keep the stock above that previous high daily close and then generate a daily close above 27.84, there is open air above to the $30 level. Any daily close below 25.64 would not re-weaken the chart.
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1) ZLAB - Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 27.19. 2) VWDRY - Averaged long at 8.68 (4 mentions). No stop loss at present. Stock closed on Friday at 4.53. 3) LXRX - Purchased at .93 Averaged long at 1.513 (6 mentions). No stop loss at present. Stock closed on Friday at .75. 4) BCTX - Purchased at .775. No stop loss at present. Stock closed on Friday at 5.01. 5) FSLRL - Purchased at 158.64. Stop loss now at 159.65. Stock close on Friday at 167.52. 6) AXP - Averaged short at 252.16 (3 mentions). Stock closed on Friday at 317.45.
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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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