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Issue #896 
January 26, 2025 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Trump has taken office and set his agenda. Traders should now begin to have more defined trades.
DOW Friday Closing Price - 44424 Trump took office on Monday and the stock market started trading on Tuesday, meaning that now the traders can start evaluating the actual (not promised or anticipated) actions his presidency will address. Economically and financially, the traders showed that they believe this presidency will be positive to those industries, given that the SPX did make a new all-time intraweek, daily and weekly closing highs. The NASDAQ closed within 6 points of a new all-time weekly closing high and the DOW closed within 1.1% of the previous all-time weekly closing high. All indexes closed near the high of the week, suggesting further upside above last week's highs (DOW at 44565, the SPX above 6128, and the NAZ above 21945). This week, the traders will continue to evaluate the President's actions, given that he did give over 100 executive orders that not only need to be evaluated but also need to be examined for actual ability to be instituted. They will be be factored into the prices and if last week was any indication, the indexes are likely to continue higher. As far as reports are concerned, on the economic side there are no reports of importance until Thursday (GDP Adv) and on Friday (PCE, which is the inflation report that is mostly used by the Fed). On the earnings front, META comes out Wednesday afternoon and AAPL on Thursday afternoon. Nonetheless and on the earnings front, the DOW will have most of the reports, as most of those usually come out the 2nd week of the earnings quarter. Having said that, none of these reports are likely to be catalytic (at least not to the downside). The earnings reports have generally been better than expected and the economic reports have mostly come in "as expected" and that is not likely to change. As such, it is unlikely that any changes of consequence will occur this week. Based on the above, this week will be mostly about the DOW and the NASDAQ to see if they confirm what the SPX accomplished this past week. The NASDAQ is within 359 points of making a new all-time intraweek high (at 22133) and within 322 points of making a new all-time daily closing high (at 22096) and the bulls are committed to breaking all of the above. On the weekly closing chart, all the bulls need is a green close next Friday by more than 4 points. On the other side, the index closed on the low of the day and Friday, suggesting that the first course of action for the week will be to the downside. The index does show a breakaway/runaway gap, with the runaway gap being at 21620 and coming off of Trump taking office. Friday's low was 21709 and If this gap is closed, the breakaway gap down at 20969 will become a magnet. If that happens, it will make it difficult for the bulls to accomplish what they are now committed to doing. The DOW will also have a say in what happens and with the chart picture being difficult for both bulls and bears, it may be the index to watch. The index is void of established support below until the 43386 level is reached (over 1000 points lower). To the upside, the index has a lot to travel to get to the all-time high at 45073 (it closed 649 points below that level on Friday). This scenario is difficult for both the bulls and the bears and with this index having most of the earnings reports coming out this week (T, GM, MSFT, IBM, etc.), it could be the one that gives the more indicative signal. The index shows "intraday" support on the 10-minute chart at 44071, as it is where the 200 10-minute MA is currently at. The index has been trading above that level for the past 7 days, suggesting that if that line is broken, the momentum will end. With absolutely no intraweek support anywhere close by, the 10-minute chart will be important. That line is presently 353 points below Friday's close. The momentum is definitely on the side of the bulls but every day things in the Trump presidency are happening and the positive feelings could change at a "flip of a coin", at least for this week. Once everything is clearer, the economic and earnings reports will once again gather importance. This suggests that this week will be almost as important as last week was. The market needs further bull statements being made and as is always the case, confirmation of those actions. HSI index got some good news this week, inasmuch as Trump did come down on the amount of tariffs that he had stated before, having stated this past week that an additional 10% in tariffs would be instituted but then on Friday (and after the index had closed for the week), he stated that he was considering not raising tariffs on China. This last statement would suggest the index will open higher on Monday. As it is, the index had a positive week, having had another green week and closing on the high of the week, suggesting further upside above last week's high at 20106 will be seen this week. The index closed just 24 points below the short-term pivotal weekly close resistance at 20090 (closed at 20066) and if another green weekly close occurs this Friday, it would open the door for a recovery rally of at least another 600 points (and possibly more). Pivotal daily close support is now found at 19700 and pivotal daily close resistance is found at 20695. The fundamental picture (as stated by Trump on Friday) does give the bulls the edge.
GOLD(Feb 2025 chart) made a new all-time daily and weekly closing highs and closed on the high of the week, suggesting further upside above last week's high at $2778 will be seen this week. The all-time intraweek high is at $2801, meaning that the bulls only need to generate another $23 rally to the upside to accomplish that. With Gold having had trading ranges of a minimum of $32 and a max of $145 over the past 20 weeks and last week having had a $48 trading range, the probabilities of a new all-time intraweek high being made (and confirming the all-time daily and weekly closing highs made this past week) is high. Fundamentally, inflation has a high probability of continuing high (or going higher) and that means that the bears have lost any edge they may have gained over the past 16 weeks. Intraweek and daily close support are found at $2141, meaning that level is now short-term pivotal support. OIL bulls failed to confirm the breakout signal given last week, having closed on Friday below the weekly close resistance at 75.56 that was broken the previous week. Oil closed on the low of the week, suggesting further downside below last week's low at 74.27 will be seen this week. This failure signal occurred after Trump requested that OPEC slash Oil prices (no response has yet occurred). Bringing down Oil prices would have some effect on inflation (which is what Trump is trying to do). On a chart basis, there is intraweek support at 72.82 and at 71.41. There is an open gap between 70.32 and 71.76 that is now a bit of a magnet. Because of Trump's request and no negative response to the request occurs, last week's high daily close at 78.71 is pivotal and decent daily close resistance. On that same chart (daily close), a trading range between 71.30 and 76.47 is likely to be seen for the time being. Nonetheless, much of this will depend on what OPEC decides to do.
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Stock Analysis/Evaluation
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CHART Outlooks
Due to the fact that Trump has now taken office and his agenda has started, the traders are now likely to put a bit more value on the chart support and resistance levels as those are now likely to be supported by the computers and algorithms that will factor in the presidents agenda. Having said that, I took a look at over 100 charts this weekend and I could only find 2 stocks that the charts favored with good risk/reward ratios and probability ratings. Both of these stocks are purchases but I was not keying on buying or selling, but on chart resistance and support levels, as well as the fundamental pictures involved. I did find a stock that I want to short but not this month but next (February). I will be giving that mention next week. Here are the 2 I found this week and both of them have a high probability rating.
PRAA Friday Closing Price - 21.72
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) in February, 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 this 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. Those rating the company a buy, have a $33 objective.
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 - 86.50
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 (on a weekly closing basis), 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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Closed Trades, Open Positions and Stop Loss Changes |
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AXP generated another new all-time intraweek and weekly closing high and closed slightly in the upper half of the week's trading range, suggesting further upside above last week's high at 326.27 will be seen this week. Nonetheless, the stock reported earnings on Friday and even though they were slightly better than expected (3.4% vs expected 3.3%), the stock fell 3.8% in value intraday and closed red for the day, suggesting that the stock may be reaching (or near) a top for this rally. The stock is now likely to be tied in to what the index market does and not what the company does. Having said that, all financial companies have been doing well and are up strongly. The stock made a low of 313.73 on Friday and if it goes above Friday's high at 324.47 on Monday, that low will become short-term pivotal intraweek support. Having said that, there is no established daily close support until 305.47 is reached and a retest of that level is highly likely to occur once the index market stalls. One rating company raised their objective to $325, one to $355 and on rating company lowered its objective from $360 down to $350. The probabilities do favor the bulls this week but the DOW's cloudy chart does leave the door open for the downside. BCTX generated a green week and no move below the previous week's low (as was expected to happen). By the same token, the stock has shown no movement of any consequence, having closed the past 3 weeks within a $.03 cents range (.408, .375, and Friday at .396). The weekly volume has dropped by 75% and that means that the traders are awaiting news before doing anything of consequence (next earning report is March 12th). With the stock not doing anything of consequence during the past 3 weeks, it does need to be noted that on the intraday chart and after the negative news of the additional stock offering came out, the stock traded below the 200 10-minute MA for 9 days but 3 days ago it moved above the line and has stayed above the line since. On this chart, a 10-minute close above .428 would be intraday positively catalytical and would likely generate a move up to the downside gap area at .52. Using the same intraday chart, a 10-minute close below .39 would generate the opposite reaction and likely cause a new all-time low to occur. BTZI made a new 10-month intraweek low but then closed in the upper half of the week's trading range, suggesting further upside above last week's high at .011 will be seen this week. There was no news to support the drop and the volume was also low, meaning that the move down was not likely to be indicative. The stock has maintained itself above the weekly close support level at .0072 for the past 8 weeks (closed at .0072 on Friday). Intraweek resistance is at .0142 and pivotal at .0174. Any daily close below .0039 would be a negative. LXRX generated a new buy signal on the daily and weekly closing chart and came within .02 cents in generating a failure signal against the bears (closed at .099 and previous weekly close support is at 1.01. The volume seen was almost double the average and therefore likely indicative. The stock closed near the high of the week and further upside above last week's high at 1.09 is expected to be seen this week. In looking at the daily closing chart, a confirmed daily close below .83 would defuse this move up, while a confirmed daily close above 1.00 would give an objective of 1.52 (200-day MA). VWDRY generated a failure signal against the bears, having closed above the previous high weekly close at 4.37 (closed at 4.49). The stock closed in the upper half of the week's trading range, suggesting further upside above last week's high at 4.61 will be seen this week. If that occurs, last week's low at 4.25 will become the necessary/required retest of the multi-year low at 4.19 seen 4 weeks ago. Confirmation of that retest would occur with a rally above 4.86. Company will report earning of Feb 5th but this stock is more sensitive to what Trump does with the clean energy market than what earnings say, meaning that the earnings report is not likely to have much of an effect. There is no previous weekly close support until the 3.97-4.05 level is reached and if the bulls are able to generate any kind of indicative break of resistance, it would be a statement that no further downside will be seen. As it is, it was anticipated just a few months ago that the stock should be between $12 and $15 and the drop down to $4 was all because of Trump's anti-clean energy stance. ZLAB generated another green weekly close but closed in the middle of the week's trading range, giving equal chances of going above last week's high at 27.24 or going below last week's low at 25.30. Much of it will depend on what happens to the Chinese index but the probabilities do favor the bulls. Short-term daily close resistance is found at 26.89, which would give a $30 objective if broken, and daily close support is found at 24.29 which would give a 21.90 objective if broken.
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1) ZLAB - Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 26.27. 2) VWDRY - Averaged long at 8.68 (4 mentions). No stop loss at present. Stock closed on Friday at 4.48. 3) LXRX - Purchased at .93 Averaged long at 1.513 (6 mentions). No stop loss at present. Stock closed on Friday at .99. 4) BCTX - Purchased at .775. No stop loss at present. Stock closed on Friday at .398. 5) SNDL - Liquidated at 1.76. Averaged long at 9.05. Loss on the trade of $1458 per 100 shares (2 mentions) 6) AXP - Averaged short at 252.16 (3 mentions). Stock closed on Friday at 321.44.
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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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