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Issue #898 
February 9, 2025 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Bears have gained the edge and further downside is now likely.
DOW Friday Closing Price - 44303 With the exception on the NASDAQ, all of the indexes generated a red weekly close this past week. The NAZ itself, only closed 13 points above last week's close, and the rest of the indexes closed less than 1% lower, meaning that the closes themselves were not all that indicative. Having said that, what was indicative was the fact that it was the 3rd week that the bulls were in a position to make a statement and failed to do so. The economic and earnings reports have all generally been supportive of higher prices but resumption of the uptrend based on Trump now being in the presidency, did not happen. On the other hand and using the daily closing charts, there were some indicative things that did happen. The DOW now shows a successfully retested double top on the intraweek chart as well as a successful retest of the all-time high on the daily closing chart. In addition and on this chart, a sell signal was given on Friday, having closed below the most recent low daily close at 44421. The SPX now shows two successful retests of the all-time intraweek high and a successful retest of the all-time high daily close at 6118, as well as a successful retest of the previous all-time daily closing high at 6090, with a close on Thursday at 6083 and a red close on Friday. The index also generated a key negative reversal on Friday. A red close any day this week below 5994 will confirm all of the above. The NASDAQ did not show anything new on the weekly closing chart, but on the daily closing chart, the index now shows a 2nd successful retest of the all-time daily closing chart, as well as 3 successful retests of the all-time high on the intraweek chart. The index also had a key negative reversal day on Friday. A daily close below 21297 will confirm all of the above. The RUT did nothing special on the weekly closing chart but on the daily closing chart, a double high daily close now exists at 2317/2316 and the index did generate a 2nd failure signal, having closed on Friday below a pivotal low daily close support at 2303, which was an important and pivotal low daily close made on November 15th. A daily close below 2258 will confirm all of the above. Bottom line is that Trump has now been in office for 3 weeks, and that was supposed to be bullish to the market. Nonetheless, the bulls have failed each and every week even though each week they have been in a position to make a statement. The only thing left in the earnings and economic reports to come out is the inflation report (CPI), that comes out on Wednesday. It is not likely it will be surprising or catalytical, means that it is now all charts. Having said that, next month's reports (March) will start to show the actual results of Trump's actions, meaning that until then, nothing major is likely to happen (for the next 3 weeks). On the other hand, the failures that have occurred these past 3 weeks do put the bulls on the defensive and do give the edge to the bears. As such, these are the levels to look at for a potential downside objective until March. In the DOW, if the intraweek low at 43879 is broken, the downside objective is 43297, or even down to 42544. In the SPX, the objective is 5853, in the NASDAQ, the objective is 20913 and in the RUT, the downside objective is 2194. Here are the levels to the upside that if broken, the bulls will once again get new ammunition and gain the edge. In every case, these are last Thursday's or Friday's highs. In the DOW that is 44966, in the SPX it is 6101, in the NASDAQ it is at 21869 and in the RUT it is at 2326. The outlook for this week is down. For this week and for Friday's close, the probabilities favor the DOW closing at 43988 (305 points lower), the SPX closing at 5995 (30 points lower), the NAZ at 21289 (201 points lower) and the RUT at 2268 (11 points lower). HSI index made a new 13-week intraweek high and a new 17-week weekly closing high. The index closed on the high of the week, suggesting further upside above last week's high at 21226 will be seen this week. This was a statement by the bulls, especially given the fact that Trump did impose another 10% tariff increase this past week. There is intraweek resistance at 21355 but above that level, there is open air above to 21782. To the downside, there is no support until 20270 and then decent and not likely-to-be-broken support at 19970. In looking at the existing intraweek support and resistance levels, it is likely that there is going to be a lot of volatility. This is a 2000 point trading range and based on the close on Friday, the index has 600 points to the upside and 1200 points to the downside. This week though, more upside is likely to be seen.
GOLD(Apr 2025 chart) made another new all-time high across the board and did close near the high of the week, suggesting further upside above last week's high at $2910 will be seen this week. There is no resistance above, suggesting that the bulls are likely to target the $3000 level, which is a psychological resistance. The inflation report on Wednesday could have some effect but it is not likely to be a negative effect. To the downside and on an intraweek basis, there is now some support at $2855 and then nothing until $2802. The $2801 level on a daily closing basis, is pivotal at this time. The bulls though, are in total control. OIL continued lower and closed on the low of the week, suggesting further downside below last week's low at 70.43 will be seen this week. On a weekly closing basis, Oil closed slightly below the weekly close support at 71.23/71.29 but not by enough (closed at 71.00) for it to be considered a break. There is intraweek support at 69.28, at 68.22 and at 67.72. The bulls need to hold above 69.28, so as not to give the bears new ammunition. A break below 67.72 would be a tangible negative. The probabilities do not have that happening, suggesting that Oil will get below the $70 level but then begin a recovery rally. On an intraweek basis, there is no resistance above until 75.18, then at 76.18 and then stronger at 78.46. The charts suggest that Oil will be on a trading range for the next few months between $70 and $78, but for the short-term (next 2-3 weeks), it is not likely the 75.18 will be broken. The likely trading range for this week is small, with 69.28 and 72.41 being the levels in play.
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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 3 weeks and on 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. One of the mentions given 2 weeks ago did reach the desired entry point and was bought. The remaining buy mention (PRAA) remains viable, given that it is not dependent on the index market (has it own outlook).
I did give 2 sell mentions last week but neither got to its desired entry point so neither was filled. They remain viable but one of them will have a new desired entry point and stop loss. I have 1 new sell mention.
SALES
TXN Friday Closing Price - 180.00
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 and broke the 200-week MA, currently at 179.29, with a drop down to 177.69 but did not close below the line, meaning that the line has not yet been broken on a weekly closing basis, and as such a bounce could still occur. The stock closed in the lower half of the week's trading range and further downside below last week's low at 177.69 is likely to be seen this week. It that doesn't happen and/or a positive reversal occurs, a rally backup to at least the 185.25 will likely be seen (this means that the desired entry point has also changed.
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.
To the upside, the 189.03 level has now become intraweek resistance, meaning that the stop loss on this trade will now be at 189.35.
As such, shorting TXN at 185.25 (or higher) and using a 189.35 stop loss and having a $160 objective, will offer a 6-1 risk/reward ratio.
Due to all the changes in the desired entry point and stop loss point, my rating has dropped to 2.75 (on a scale of 1-5 with 5 being the highest.
QTWO Friday Closing Price - 93.72
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 chart has changed, given that the stock has now gone below last month's low, meaning that last month's intraweek high has now become established resistance. This allows for a better and more dependable short-trade as well as a better risk/reward ratio and rating.
QTWO generated a key negative reversal day on Friday and will likely continue lower. The stock could still get back up to 96.46 as Friday's high was 97.25. Nonetheless, the 200 10-minute MA is currently at 94.43 and it is unlikely that level will be broken, meaning that the desired entry point into the trades is somewhere around that price. The stop loss could be a 97.35 but a dependable one will be at 100.93
As such, the desired entry point is around 94.43, the stop loss point is at 100.93 and the objective is $60. It is 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).
GILD Friday Closing Price - 96.04
GILD is a pharmaceutical company that has increased in price 62% over the past 8 months and 14% since Trump won the election. The stock made a new all-time intraweek high this week (at 100.51) but the generated a negative reversal, having closed red and on the low of the week, suggesting further downside below last week's low at 95.90 will be seen this week. With this action, the stock also generated a failure signal, suggesting that a top to the rally has been found and that a retest of the recent lows will be seen.
With the action seen this past week, GILD seems to be in a up channel, with the 2-point channel low line being presently at 90.00. In addition, the previous all-time high weekly close is at 89.03, which makes that objective not only viable but very likely to be seen.
GILD is not a stock that should be chased, meaning that waiting for the desired entry point is key to the trade. This gives the trade less of a probability of being made than normal but the desired entry point (the previous all-time intraweek high at 98.90) is certainly a viable objective if any rally is seen.
One of the reasons GILD generated a negative reversal week is that one of the rating companies raised it's upside objective this past week from $73 to $80, but the stock was trading at $100 at the time, meaning it was above the target price by $20.
In order to achieve at least a 4-1 risk/reward ratio and having a 90.00 objective and using a stop loss at 100.61, the desired entry point "has to be" above 98.10. This is a purely chart trade but the rating I give the trade (if the desired entry point is followed) is a 4 (on a scale of 1-5 with 5 being the highest).
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).
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Updates
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Closed Trades, Open Positions and Stop Loss Changes |
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AXP generated a negative reversal week, having gone above the previous week's high, below the previous week's low and then closing red. Nonetheless, the stock closed very slightly above the midpoint of the week's trading range, suggesting a very slightly higher probability of going above last week's high at 323.25 than going below last week's low at 309.17. If It does go below the last week's low, the needed/required retest of the all-time high will have occurred, suggesting that at the very least a retest of the previous all-time high weekly close at 304.68 will occur. In looking at the daily closing chart, there are now 2 successful retests of the all-time high daily close and the last one seen on Wednesday, was above the first one, meaning that a small failure signal was given as well. Confirmation of all of this, will occur if the stock generates a daily close any day this week, below 315.25. A daily close above 325.87 will negate all of the above. BCTX company announced the sale of another 785 thousand public shares at $4 per share, which caused the stock to make yet another new all-time intraweek and weekly closing low. Nonetheless, earlier in the week, the company also announced that one of its new cancer medicines had shown positive results and that news caused the stock to go up from $5 to $8. That rally high at 7.87 is now pivotal resistance, which if broken, would suggest the $10 level will be visited. To the downside, there is no support at this time but given that the public sale got filled at the $4 level, that level should now become support, once the stock gets above it (closed on Friday at 3.73). BTZI did nothing of any consequence this week, having traded all week between .007 and .008. The stock did break that trading range on Friday, having closed at .068 and on the low of the week, suggesting further downside below that level will be seen this week and likely on Monday. Support is found at .006 and important at .004. Resistance is found at .011 and pivotal at .0124. FSLR generated a green week and a close in the upper half of the week's trading range, suggesting further upside above last week's high at 171.54 will be seen this week. The stock did generate a buy signal on the daily closing chart, having closed above the previous high daily close at 167.62 (closed at 168.37). There is open air above up to the 175.88 level (on a daily closing basis). A close above that level would mean the correction is over. A daily close below 162.37 would weaken the chart and a daily close below 160.24 would resume the recent downtrend. Rating companies reiterated their upside objectives with the least being $237. All rating companies (7 of them) have the stock rated a buy. LXRX did generate another red weekly close on Friday but nothing was broken on any chart. The stock did close on the low of the week, suggesting further downside below last week's low at .707 will be seen this week. A break below .67 (.69 on a daily closing basis) would weaken the chart, meaning that the bulls need to do something this week, having closed on Friday at .713. Minor daily close resistance is found at .827 and pivotal at .99/1.01. TNC generated a positive reversal week, having made a new 3-week low and then closing green and near the high of the week, suggesting further upside above last week's high at 87.46 will be seen this week. If that happens, last week's low at 82.23 will become the needed/required retest of the 15-month low at 78.57. It can also be said that the intraweek support at 82.54 held up, with the stock getting down to 82.23 and then turning around. Short-term pivotal resistance is found at 88.54, which if broken would offer a short-term objective of $94. Last week's low at 82.23 is now short-term intraweek support. VWDRY made a new 9-week intraweek high based on the announcement from the company that it had a record order rate in 2024 and that it is fully booked for 2025. This announcement did erase some of the fears of Trump not supporting clean energy. The announcement caused the stock to rally 15% (from low to high of the week) and to close in the upper half of the week's trading range, suggesting further upside above last week's high at 5.09 will be seen this week. The stock did generate a buy signal, having closed on Thursday above 2 previous high daily closes. Nonetheless, Thursday's close at 5.01 failed to break the high daily close at 5.13, which symbolizes the pivotal resistance level formed after Trump took office. In addition, no buy signal was given on the weekly chart, with the stock closing on Friday at 4.83 and the previous high weekly close being at 4.86. Having said all of the above, this company does not depend on U.S. purchases (it is a foreign company) and it being the biggest developer of wind turbines in the world, it will continue to be supported strongly worldwide. There is pivotal resistance on both the daily and weekly chart at 5.13/5.14, which if broken, would offer open air to $6. A daily close below 4.76 would slightly weaken the chart. ZLAB generated a relatively uneventful week, having gone above the previous week's high by only $.11 cents and stayed above the previous week's low by $.19. The stock did close green and in the upper half of the week's trading range, suggesting further upside above last week's high at 28.34 will be seen this week. Having said that, the fact that the Chinese index generated a 7% rally this past week and the stock only closed 1.7% higher than the previous week's close, is disappointing. There is an open gap at 28.65 that should be targeted for closure and there indicative intraweek resistance at 30.40, which if both are accomplished, will give the bulls new ammunition. Short-term intraweek support is now found at 26.07.
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1) ZLAB - Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 27.53. 2) VWDRY - Averaged long at 8.68 (4 mentions). No stop loss at present. Stock closed on Friday at 4.83. 3) LXRX - Purchased at .93 Averaged long at 1.513 (6 mentions). No stop loss at present. Stock closed on Friday at .713. 4) BCTX - Purchased at .775. No stop loss at present. Stock closed on Friday at 3.73. 5) FSLR - Purchased at 158.64. Stop loss now at 159.65. Stock close on Friday at 168.34. 6) AXP - Averaged short at 252.16 (3 mentions). Stock closed on Friday at 316.77. 7) TNC - Purchased at 82.42. Stop loss is at 78.47. Stock closed on Friday at 86.42.
Previous Newsletters
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Encyclopedia of Chart Patterns. A must have for chart aficionados! |
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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