Issue #903
March 16, 2025 , | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Action suggests that some recovery could be seen this week, Fed rate decision is on Wednesday
DOW Friday Closing Price - 41488 The slide down continued this past week as the Consumer Confidence number came out at its lowest it has been since November 2022. It was unexpectedly low (57.9% vs expected 63.2%) . This means that there is a lot of fear out there as to what is to come under Trump's administration. Over the past 4 weeks, the DOW and the SPX have both dropped 10% in value and the NASDAQ and the RUT have dropped 14% in value. Nonetheless, on Friday the indexes generated a rally that caused the NASDAQ and the RUT to close near the high of the week, and the SPX to close in the upper half of the week's trading range, suggesting further upside above last week's highs (NAZ at 19867, RUT at 2058, and SPX at 5705) will be seen this week. If that occurs, it might be a sign that a low to this correction has been found, or at least a pause in the correction, until more information comes out. This week, the most important report is the Fed's rate decision on Wednesday. What is expected is nothing new will be done. The Fed will not raise or lower the present interest rates. The Retail Sales number does come out on Monday and it is expected to be better than last month's number, which was -.9%. Expectations are for the number to be positive and between +.5-.7%. Having said all of the above, the indexes did have a very negative week chart-wise. The DOW made a new 6-month low and broke 2 important and pivotal intraweek supports at 41844 and at 41647 (42052 and 41938 on a weekly closing basis). The low for the week was 40661 and the close was at 41488. The SPX also made a new 6-month low and broke the last intraweek support level built during these months, which was at 5696. In addition, it also generated another failure signal, having closed below the previous all-time high weekly close at 5648 (closed at 5638). The NASDAQ also made a new 6-month low and confirmed the sell and failures signals given the previous week. The RUT did not generated any new signals. It did get below the 200-week MA, currently at 2015, having made a 1984 intraweek low but then rallied to close above the line, having closed at 2044. What does all of this mean? It means that this week the bulls have to attempt to negate the signals given. The Fed Rate decision on Wednesday will be the key. Nonetheless, the Fed rate decision is not likely to generate any new selling or buying interest of consequence, which means that the traders might generate a small recovery rally (given the big fall that has been seen but not yet confirmed as a true negative) that could be seen during the next 3 weeks, given that the fear felt now, does require next month's economic numbers to come out to be confirmed. As such and chart-wise, the probabilities favor some upside to be seen this week. In looking at the weekly closing chart, the DOW is likely to close this Friday at 41938 (503 points higher). The SPX is likely to close at 5827 (191 points higher). The NASDAQ is likely to close on Friday at 20391 (687 points higher). The RUT is likely to close on Friday at 2144 (80 points higher). These levels are all within the concept of a bear market, meaning that a rally to close at those levels is still considered negative overall to the charts. Those levels are targets and likely will be seen this week but it is possible that it will take a bit longer than a week to reach. Here are the levels to watch this week on a daily closing basis. In the DOW, a confirmed daily close above 41959 would give the bulls some new ammunition. In the SPX the 200-day MA is at 5740, which if broken on a confirmed basis, will give the bulls new ammunition. In the NASDAQ , that line is at 20256 but the index would have to close above 20690 to give the bulls new ammunition. In the RUT, the only level that has any chance of being reached and that would have any positive chart response is 2124. To the downside and on a daily closing basis, these are the levels that if broken, would give the bears new ammunition this week. In the DOW, a daily close below 40813 (675 points lower) would generate more selling interest. In the SPX that level is at 5551 and in the NASDAQ it is at 19225. In the RUT, the 2015 level is pivotal, on a daily closing basis. The rally on Friday has committed the bulls to have a further recovery week. It is not likely that the bulls can generate enough buying interest at this time, which would mean that the correction is over. As such, we are likely to still be in a bear market, but this week there likely be a pause and some upside seen. HSI index generated an uneventful inside red close week. It did close in the upper half of the week's trading range, suggesting further upside above last week's high at 24303 will be seen this week. The previous week's high at 24669 is now intraweek resistance, which if broken would give 24928 as the next objective. To the downside, the 23198 is now intraweek support with some meaning and the 22547 level is now pivotal intraweek support. Index closed on Friday at 23959.
GOLD(Apr 2025 chart) made a new all-time intraweek and weekly closing high at $3001 and closed near the high of the week, suggesting further upside above last week's high at $3017 will be seen this week. The only resistance above is psychological and it is at the $3000 demilitarized zone, meaning $3030. It is not anything else than psychological but with the overall uncertainty in the traders minds, it have a good chance of holding up. To the downside, the previous all-time high weekly close is at $2940 and on a daily closing basis, it is at $2956. Those levels are now support. OIL generated and uneventful inside week but did close near the high of the week, suggesting further upside above last week's high at 67.94 will be seen this week. The bears remain in control, but the action seen this past week could signal a pause until more fundamental information comes out. Upside target for this week is 71.48. A daily close above 67.68 would make it possible. Any daily close below 66.03 would weaken the chart and a daily close below 65.13 would be a strong negative. Oil closed on Friday at 67.18
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Stock Analysis/Evaluation
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CHART Outlooks
It is very difficult right now to trade this market, due to the overall uncertainty of what "is to happen". Nonetheless and overall, the probabilities continue to favor the bears. Having said that and after looking at about 50 charts, it is difficult to find stocks where positive risk/reward ratios can be found. I did find one stock where a short position is likely the way to go, but it does require the stock to rally to reach the desired entry point to make the trade viable.
SALES
GILD Friday Closing Price - 111.44
GILD is a biopharmaceutical company, discovers, develops, and commercializes medicines for virology, oncology and other therapeutic areas in the United States, Europe, and internationally. The stock generated a negative Key reversal week, having made a new all-time high at 119.96 and then turning around to close red, below last week's low, and on the low of the week, suggesting further downside below last week's low at 110.90 will be seen this week.
The key reversal suggests that GILD has found a top to this rally, or at least a temporary top that will generate some selling as well as building a new support area.
GILD has moved up from 62.07 to 119.96 over the past 10 months. The 89.03 area was pivotal resistance, which got broken in October. That level was successfully tested a few weeks later, meaning that it is NOT a downside target. What is a potential downside target is the high weekly close made thereafter at 96.56. With a top likely found, the $100 demilitarized zone ($97-$103) is a magnet now.
Having said the above, GILD dropped $8 in value (from the high seen) and selling it here, does not offer a good risk/reward ratio. In addition and having made a new all-time high, the 119.96 level requires a retest of it. In looking at the daily chart, a rally back up to $117 does look like a high probability, though not necessarily this week.
A sale of GILD anywhere near the 117.00 level and using a stop loss at 120.35 and having a 97.00 objective, offers a 6-1 risk/reward ratio. My rating on this trade is 3.5 (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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A generated a downtrend signal, having dropped 21% from the recent high weekly close at 153.52 to Friday's close at 121.128. Nonetheless, the stock did get close to an area of intraweek support between 113.28 and 112.67, which is the objective of this mention (low last week was 117.17). The stock did rally from the low a bit but still closed in the lower half of the week's trading range, suggesting further downside below last week's low will be seen this week. On a daily closing basis, the level to watch is 126.70. A daily close above that level would be a sign that the downtrend is over. Having said that, the probabilities do favor a rally up to the 125.42 area, to test the breakdown level at that price. BCTX showed some signs of buying interest this past week, having rallied 14% from the low and making a new 10-trading day high. The stock closed on the high of the week, suggesting further upside above last week's high at 3.89 will be seen this week. Having said that, the bulls do require a daily close above 5.17 for a buy signal to be given. In looking at the intraday chart, a confirmed 10-minute close below 3.40 would generate renewed selling interest. Using the same intraday chart, there is resistance at 4.06. BTZI bulls were unable to generate any new action this past week, having had an identical trading range between .004 and .007 as was seen the previous week. This means the stock is waiting for news or positive action in the AI industry. With NVDA having generated a positive reversal week, meaning that further upside is likely to be seen, probabilities do favor the bulls this week. A close above .0092 would confirm that a rounded 3-year bottom has been built, and from which an uptrend might begin. A close above .017 would confirm all of the above. Any break below .004 would now be a negative of some consequence. FSLR generated a negative reversal week, having gone above the previous week's high and then closing red and on the low of the week, suggesting further downside below last week's low at 131.52 will be seen this week. Having said that, this would not necessarily be a negative, given that the stock made a new 28-month low 3 weeks ago (at 124.96) that does "require" a successful retest of it, before the bulls step back in. The "key" level to watch (on a daily closing basis) is 137.83. That was the pivotal level of daily close support that when broken, caused the stock to make the new 18-month low. Any daily close above that level, would suggest the down move is over. On the opposite side, any daily close below 123.96, would mean further downside is coming. The charts do suggest that the stock will see a rally back up to at least the $173 level, over the next 6 weeks. LXRX generated an uneventful inside week, but did make a new all-time weekly closing low at .366. Nonetheless, the stock did close near the high of the week, suggesting further upside above last week's high at .382 will be seen this week. Two weeks ago, the stock gapped down due to some mixed results on one of their Phase 2 medicines for diabetics but then on that Thursday, the company reported better than expected earnings and it caused the small rally to occur. There is a gap up at .063 that if closed, will give the bulls some new ammunition. A break above .746 would confirm that the bottom has been made. There were two new rating companies that began coverage on the company, meaning that there are now 3 of 4 analysts with a strong buy rating. The other rating company has it as "indifferent". Any new low below the previous week's low at .286 would be a negative. PRAA made a new 4-month intraweek low, breaking a total of 3 previous intraweek lows at 19.17, at 18.71 and at 18.64, which left the door open for a drop all the way down to 11.85 (low made in October 2023). Nonetheless, an old (from May 2023) intraweek support at 17.74 held (low last week was 18.09) and the stock rallied to close near the high of the week, suggesting further upside above last week's high at 20.10, will be seen this week. It is of note that none of the weekly closing support levels at 19.27, at 18.84 and at 19.60 got broken, suggesting that the drop this past week might have been traders simply triggering the stop losses below. On a daily closing basis, a close above 20.00 would confirm that this past week's break was false and would suggest that 21.63 will be visited, which is where the 200-day MA line is located. Any daily close now below 18.82, would be a strong short-term negative. VWDRY generated a new 18-week intraweek and weekly closing high and closed near the high of the week, suggesting further upside above last week's high at 5.33 will be seen this week. The stock broke a pivotal weekly close resistance at 5.14 that opens the door for a rally at least up to the 5.94 level. Any daily close now below 4.99 would erase what the bulls were able to do this past week. ZLAB generated a new 35-month intraweek and weekly closing high and closed near the high of the week, suggesting further upside above last week's high at 39.61 will be seen this week. There is intraweek resistance at 40.42 and at 41.74 but neither of them is a strong or pivotal resistance. The 200-week MA, currently at 45.94 is now a magnet. Nonetheless, getting up to the line will not be so easy, given that the stock now shows 9 weeks in a row of green weekly closes, meaning that some red closes would not be surprising to see. On a weekly closing basis, there is no support of consequence until 32.27. On a daily closing basis, short-term pivotal support is found at 34.69. The stock closed at 38.20 on Friday and the momentum is on the side of the bulls. A daily close above 40.91 would suggest that the 200-week MA will be the immediate target.
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1) ZLAB - Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 38.20. 2) VWDRY - Averaged long at 8.68 (4 mentions). No stop loss at present. Stock closed on Friday at 5.23. 3) LXRX - Purchased at .93 Averaged long at 1.513 (6 mentions). No stop loss at present. Stock closed on Friday at .366. 4) BCTX - Purchased at .775. No stop loss at present. Stock closed on Friday at 3.84. 5) FSLR - Averaged long at 155.50 (3 mentions). No stop loss at present. Stock closed on Friday at 132.51. 6) TNC - Liquidated at 87.52. Averaged long at 83.33. Profit on the trade of $844 per 100 shares (2 mentions) 7) A - Shorted at 138.36. Stop loss now at 138.69. Stock closed on Friday at 121.18. 9) PRAA - Purchased at 19.99. Stop loss now at 18.65 (stop close only). Stock closed on Friday at 19.60.
Previous Newsletters
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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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