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Issue #899 
February 16, 2025 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Trend up continues but uncertainty remains as bad economic news overhangs the market.
DOW Friday Closing Price - 44506 The SPX and the NASDAQ made new all-time high weekly closes, though the NAZ itself was the only one to make a new all-time intraweek high (SPX fell short of doing that by 1 point). The DOW and the RUT did not participate in the same way, with the DOW advancing by .4% but not accomplishing anything on a weekly closing basis and the RUT closing unchanged over the previous week's close. The inflation report came out higher than expected (.5% vs expected .3%) and the Retail Sales number coming in much lower than expected (-.9% vs expected .0%), with both numbers being negative to the market. Nonetheless, Trump's announcement on Thursday that he would not be introducing any new tariffs turned the tables around and the bulls took advantage of that to negate the negatives of the other reports. Having said that and after evaluating the fundamental information, this is not an event that is likely to generate additional buying of consequence. In looking at the chart of the SPX, it seems quite evident that the index is in a slight up channel that could bring a bit more upside (perhaps 30-40 points on an intraweek basis) but then a fall back toward the 5900 level (which would be a drop of about 240 points), which is where the bottom of the channel is presently at. The fundamental picture does suggest that this is the probability for now (until the next set of economic reports come out, the first week of March). The negative and positive news that came out this week has now been absorbed into the prices and unless something unexpected happens over the next 3 weeks, the probabilities favor the traders following the chart picture. This outlook is supported by the DOW and the RUT not having accomplished anything new this week. Having said all of the above, the DOW does have a role of some importance this week, due to the bulls inability to generate enough buying to make a new all-time high this week in spite of the new highs made in the other 2 indexes. The index has a double top at 45073 and 45054 and that double top now has 2 successful retests of it on the intraweek daily chart, with a high at 44966 (made on Feb 6th) and the high made on Thursday at 44768 (followed by a red close on Friday). A break above 44768 would now be a sign that the double top would likely be broken and if that happens, the bulls would gain a new advantage that would likely be meaningful. A break below 44104 would generate a break of the most recent intraweek low and bring in new selling and likely of some substance. As far as the short-term intraweek support levels now in the other indexes, the SPX has it at 6003, the NASDAQ has it at 21454, and the RUT has it at 2240. Nonetheless, the bulls need to keep the NASDAQ above the all-time daily closing highs at 22096 and in the SPX. they need to make a new all-time daily closing high at 6118 (closed at 6117 on Thursday) on Monday, because if neither of those occur, the bears will immediately gain some ammunition and last week's rally will be discredited (as a manipulated fluke) immediately. As such, Monday's action will likely determine what happens next week. There are no economic reports of consequence do out this week. HSI index made another new 14-week intraweek high and a new 18-week weekly closing high and closed on the high of the week, suggesting further upside above last week's high at 22630 will be seen this week. The index has rallied 12.7% (2656 points) over the past 2 weeks and with Trump now stating that he will not be raising tariffs anymore (unless China raises tariffs on the U.S.), the fear of that has now gone away. With all the changes that are occurring in the U.S., it is certainly viable to think that China could benefit from them. The index closed just 99 points away from the high daily and weekly close for the past 3 years, which if broken in conjunction with a new 3-year intraweek high at 23241 would open the door for an additional run up to 25000. To the downside and on a daily closing basis, there is minor support at 22113 and then nothing until 21294. The outlook for a breakout of this resistance area "at this time" is probably not more than 20-30%.
GOLD(Apr 2025 chart) made another new all-time high across the board but did close near the low of the week, suggesting further downside below last week's low at $2879 will be seen this week. Gold generated a negative reversal day on Friday, going above Thursday's high, getting to within $4 of its all-time high made on Wednesday at $2968 and then dropping $75 over the next 10 hours. Having gotten up to $2968 does mean that the $3000 demilitarized zone ($2970-$3030) has been reached and profit taking occurred. The previous all-time daily closing high is at $2800, and that is definitely a potential downside objective, with the only question being "whether that level will be tested on this correction or later on". There is intraweek support at $2886, at $2855 and then at $2802. Having said that, the probabilities favor Gold being in a trading range between $2800 and $3030 for the next 3 weeks. OIL generated another red week but the red was quite limited as Oil closed just $.26 cents below the previous week's close. It did close near the low of the week, suggesting further downside below last week's low at 70.22 will be seen this week. 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
Though new highs were made in two of the 4 indexes, the economic news was negative, suggesting that there is more opportunities for sales than purchases. One of the previous week's sales was instituted but news hit the stock and covering of the position (at a small profit) had to be done. This week there is one new sale mention, as well as the one remaining. One purchase mention remains but reaching the desired entry point has not occurred for the 3 weeks the mention has been up. It remains viable though.
SALES
TXN Friday Closing Price - 183.03
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 38-week intraweek low this past week but then generated a positive reversal, having gone 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 184.72 will be seen this week. Once again, the stock held above the 200-week MA on a weekly closing basis and will bring in new buying interest this week.
To the upside, there is a mountain on intraweek resistance starting at 185.45 and going up to 191.34. There is short-term resistance at 189.03 which is resistance that is likely to hold, if and when the indexes don't continue higher, above the levels listed above. Nonetheless, the entry point given last week at 185.25 is likely to be broken, suggesting 185.99 to 186.33 is now likely the target for this week. If those levels are broken, a rally up to at least 188.03 will likely to be seen. As such, there is not a clearly defined desired entry point at this time but the stock does remain a viable short. The stop loss point at present is at 189.35 but if seen, a rally up to the 191.34 will likely occur, which would make the short viable again, at that price.
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.
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 the reversal rally and now the key support and resistance levels becoming clearer, the probability rating is now at 3.25 (on a scale of 1-5 with 5 being the highest.
A Friday Closing Price - 134.67
A (Agilent Technologies, Inc.) provides application focused solutions to the life sciences, diagnostics, and applied chemical markets worldwide. The stock reached a high of 179.57 in 2021 but since then and during the last 4 years, it has traded totally sideways with a high at 160.26 and a low of 96.80 being seen during this time. Nonetheless, on 29 of those 35 months, it traded between 112.71 and 156.72 (based on weekly closes). Having said that and using the weekly closing chart, the chart now shows 4 successful retests of the all-time high weekly close, as well as generating a failure signal the previous week, confirming it this week, and closing below the 200-week MA, currently at 137.18, on Friday.
There are 6 analysts following A and most are indifferent to the company at this time. As such and given the action seen this past week, it does seem that the stock is heading down to test the weekly close support at 112.71. It is important to note that the low weekly close for the past 4 years is at 102.77 and that level has not yet received a serious retest since it was made. This move down is likely to be that retest.
Given that there is mostly fundamental indifference to the stock, the chart is likely to be what determines the action in A, and that suggests that before heading down further, a retest of the broken 200-week MA will occur. It is also interesting that the stock gapped down on Wednesday (between 141.92 and 139.80) and there was no news to support the gap. This can be evaluated as 1) weakness of consequence is being seen, or 2) the gap is a magnet unless another gap occurs. The stock did close on the low of the week and further downside below last week's low at 134.31 is expected to be seen this week.
This scenario does open up 3 different desired entry points as well as 2 different stop loss points. 1) Should A gap down on Monday, a short position should be instituted if 132.76 is broken. The stop loss would be at 134.31 (closure of the gap). Such a scenario would give a risk/reward ratio of about 10-1. 2) The second scenario is to wait for the stock to reach the 200-week MA and place a stop loss at 143.17. This scenario offers a 4-1 risk/reward ratio. 3) The third option is to wait for the gap to be filled, the stop loss remain the same, but the risk/reward ratio would soar to 23-1 but the probability rating would be no better than 50-50.
The second option is the most likely to happen but the first has a good chance of occurring.
PURCHASES
PRAA Friday Closing Price - 23.67
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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BCTX generated a positive reversal week, having made a new all-time low at 3.33 and then rallying 30% to close on the high of the week, suggesting further upside above last week's high at 4.35 will be seen this week. The reason the stock rallied was that the company announced that it had regained "NASDAQ" compliance. The compliance was reached when the company did a 15-1 reverse split that put the stock above $1 per share (NASDAQ requirement). There is short-term pivotal resistance at .4.84 and again at 6.38. Pivotal and indicative resistance is found at 7.87. There is no support on the daily chart until 3.33 is reached. Nonetheless and on the 10-minute closing chart, there is support at 4.08 and then a bit more indicative at 3.88. BTZI generated a positive reversal week, having made 3-week intraweek low at .004 and then closing above the previous week's high at .008. The stock closed on the high of the week, suggesting further upside above last week's high at .0092 will be seen this week. If that does occur, last week's low will become the required/needed retest of the low seen 4 weeks ago a .0011. A rally above .0124 would confirm that the chart has now built a strong bottom and that the downside is over. A rally above 0.17 would generate new and indicative-of-up-trend signal. FSLR generated a new 44-week intraweek and weekly closing low and closed near the low of the week, suggesting further downside below last week's low at 157.07 will be seen this week. On a daily closing basis, there is decent support around the 159.00-160.00 area that should hold up. The stock closed at 159.76, meaning this is an area that the bulls need to support. Short-term pivotal resistance is found at 168.34, which if broken would suggest the correction is over. Rating companies remain bullish on the stock with the minimum upside objective being $237. Nonetheless, Trump remains a short-term negative catalyst for the stock. LXRX generated a positive reversal week, having made a new 7-week intraweek low and then going above the previous week's high, closing green, and near the high of the week, suggesting further upside above last week's high at .827 will be seen this week. Intraweek resistance is found at .948, at 1.02 and pivotal at 1.09. The bears have been trying to take the stock lower since October but now a strong bottom has been built, with 3 successful retest of the December low at .62. Indicative support is found at .64. TNC generated a new 11-week intraweek high and a new 10-week weekly closing high but did close in the lower half of the week's trading range, suggesting further downside below last week's low at 86.13 will be seen this week. The stock shows 1 successful retest of 16-month low at 78.57 and this move down is likely to be the 2nd retest of that low. Downside objective of this move down could be the 84.57/84.92 level, which shows some established intraweek support there. The bulls were able to generate new buy signals on both the daily and weekly closing charts, suggesting that this recovery rally is likely to continue with the 200-day MA, currently at 93.70 as the objective. If the stock does get down to the expected support, adding positions should be considered, using a stop loss at 82.13. Such a trade, would offer a 3.7-1 risk/reward ratio. VWDRY generated an uneventful inside week but did close red and near the low of the week, suggesting further downside below last week's low at 4.56 will be seen this week. Intraweek support is found at 4.45, which is also a short-term pivotal daily close support, which if broken would negate the positive rally seen the previous week with the rally to 5.08. The chart does suggest that the stock will continue to trade with a slight edge for the bulls and with at 5.14 objective. A daily close above that level would be considered a breakout of note. ZLAB generated a new 10-week intraweek high and a new 14-week weekly closing high, and closed near the high of the week, suggesting further upside, above last week's high at 30.00, will be seen this week. There is short-term intraweek resistance at 30.40 and then further resistance at 30.67, at 31.22, and at 32.48/32.60, with the latter if broken, giving the bulls new ammunition for a rally to the pivotal intraweek mid-term resistance at 36.60. To the downside, any drop now below 26.07 would negate all the gains gained.
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1) ZLAB - Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 29.00. 2) VWDRY - Averaged long at 8.68 (4 mentions). No stop loss at present. Stock closed on Friday at 4.61. 3) LXRX - Purchased at .93 Averaged long at 1.513 (6 mentions). No stop loss at present. Stock closed on Friday at .784. 4) BCTX - Purchased at .775. No stop loss at present. Stock closed on Friday at 4.35. 5) FSLR - Purchased at 158.75. Averaged long at 158.695 (2 mentions). Stop loss now at 156.65. Stock close on Friday at 159.76 6) TNC - Purchased at 82.42. Stop loss is at 78.47. Stock closed on Friday at 87.48. 7) QTWO - Shorted at 95.52. Covered shorts at 93.90. Profit on the trade of $162 per 100 shares.
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The opinions and commentaries by Mr. De Vito are not a recommendation to buy or sell, but rather
a charting guideline, based on his own knowledge and experience, regarding the stocks he is following or
that are brought to him by others. Mr. De Vito does not presently offer a track record of his trading experiences.
No inference of success and/or failure should be assumed. The
information enclosed above, regarding his background, length of trading, and experience, is correct
but is not meant to suggest, state, or infer any future success in trading, based on his opinions. The information herewith included should only be used by investors who are aware of the risk inherent in securities trading. Mr. De Vito accepts no liability whatsoever for any loss arising from any use of the information and/or comments he supplies. |
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