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Issue #944 
Jan 4, 2026 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| The New Year is here and the bulls should start in a positive manner.
DOW Friday Closing Price - 48382 The bulls were unable to carry through on the previous week's closes near the high of the week, given that they all had a down week, as well as red close. This was the 2nd week out of the last 4 weeks that this has happened, and it does open the door for the bears to accomplish something, if the reports at the beginning of the year gives them some ammunition. By the same token, it is hard to give much attention to what happens to the index market in the last 2 weeks of December, as it is a holiday period where many of the traders take off. There are several reports due out this week that can be indicative. On Monday, the ISM index report comes out and it is expected to be 48.4%. Last month it was 48.2%, so it is expected to be better. On Friday, the Jobs report comes out and expectations are for it to be 55K, with last month being 64K. A lower-than-expected number on both would be seen as a negative, though the reality is that the traders are keying on what the Fed will do with the interest rate decision the last week of the month, meaning these reports are not likely to be catalytic enough to move the market in any big way. Though the index markets had a negative week (unexpectedly so), the bears did not accomplish any new signals, meaning that the previous week's analysis of the market remains the same (higher prices in January but limited in nature). Here are the levels of resistance and support that the traders will be facing/looking at this week. In the DOW, the intraweek level of resistance is at 48886 and support is at 47849. A break of either will bring automatic buying or selling interest. In the SPX, those same levels are at 6945 and at 6809. In the NASDAQ, those levels are at 25716 and at 24647. It is evident that the SPX remains the index to watch, given that it is the only index that made a new all-time intraweek and weekly closing highs 2 weeks ago. By the same token, the index on Wednesday generated a failure signal on the daily closing chart and confirmed that failure on Friday, having closed both days below those two previous all-time daily closing highs at 6890 and at 6901. This week and especially on Friday (after both economic reports have come out), if the index closes below 6827, the bears will get the edge. Nonetheless, for the bears to gain any measure of control, they would need to close the index below 6774 on any day this week. Once again though, there are no strong economic reasons for the bulls to lose control in January, at least not until the Fed announces its rate decision. As such, upside action (though likely limited) is expected to be seen this week. HSI index generated a positive reversal week and did give a small buy signal on the weekly closing chart, having closed above the most recent weekly closing high at 26085 (closed at 26338). The buy signal did suggest that the recent downtrend is over and that some sideways trading (with a slight bias to the upside) will occur in January. The index closed on the high of the week, suggesting further upside above last week's high at 26370 will be seen this week. There is intraweek resistance at 26588 and stronger at 27058. The index will likely target the latter for sometime in January, but it is not likely that level will be broken at this time. Intraweek support is now found at 26003, with it too not likely to get broken this month.
GOLD(Feb 2026 chart) generated a red week with a huge $270 trading range (likely meaning strong selling interest came in) and a failure signal given on the daily closing chart, with Gold closing on Friday below the previous all-time daily closing high at $4359 (closed at $4345). Gold closed near the low of the week, suggesting further downside below last week's low at $4285 will be seen this week. With the failure signal given, as well as the large downside trading range seen, it seems likely that Gold will continue downward toward a weekly close next Friday at $4197 (previous all-time weekly close). At this time and with this chart, a daily close above $4402 would give the bulls some new ammunition with which to test the all-time high at $4584. Nonetheless, that does not seem to be a good possibility right now. OIL generated an uneventful inside green week, but did close in the lower half of the week's trading range, suggesting further downside below last week's low at 56.68 will be seen this week. If that does occur and Oil closes red next Friday, a successful retest of the weekly close breakdown point at 57.54 will occur (Oil closed at 57.32 on Friday). With Trump taking Maduro out on Saturday and being presently in control of Venezuela and it's large oil supplies, I would "guess" that Oil will open lower and head lower thereafter. Intraweek support is found at 54.98, which if broken, would open the door to the $52 level. A rally above 58.88 would take away the control the bears presently have.
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Stock Analysis/Evaluation
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MENTIONS For this week
I do expect the index market to head slightly higher in January, meaning that sales at this time are not likely the way to go. By the same token, the upside is limited so I had to look for stocks that do have a close by support level and enough upside to make it at least a 4-1 risk/reward ratio. I did find one stock that fits that scenario and one small cap stock that does not have a big upside for the short-term but does have a big upside for the mid-to-long term and should be considered "if" the desired entry point is reached.
PURCHASES
EDC Friday closing price - 58.99
EDC is a leveraged exchange-traded fund designed for short-term trading, offering 3x daily exposure to the MSCI Emerging Markets Index, making it highly volatile and not for long-term holding, focusing on sectors like Financials, Tech, and Consumer Cyclicals in emerging economies. As such, it fits several of the short-term bullish scenario.
EDC has been in an uptrend since March, when it was trading down at the $30 level. For the past 3 months (since September), the stock was in a sideways trading range between $46 and $56 but this past week, the stock made a new 46-month intraweek and weekly closing high and closed on the high of the week, suggesting further upside above last week's high at 59.04 will be seen this week. There is no established resistance above until the $70 area is reached, and even then that area is not considered strong resistance. With the previous daily and weekly closing resistance (which is now support) close by, it does give a good risk/reward ratio and a good probability rating.
Here are the specifics of this. EDC had a previous multi-year daily closing high at 57.69 (weekly close at 55.55). As such, a confirmed daily close below 57.69 would be a good reason to get out. To the upside there is total open air to the 71.44-72.44 level (on a weekly closing basis). On and intraweek basis, the resistance is at 73.89.
What that means is that a purchase of EDC at Friday's closing price at 58.99 and using a stop loss (on a confirmed daily closing basis) at 57.59 and having a 71.44 objective, offers a 5-1 risk/reward ratio. My rating on the trade is 3.25 (on a scale of 1-5 with 5 being the highest). Under normal market conditions, I would give the stock a 4.25 rating but given the uncertainty of the market, the rating is lowered. Nonetheless, it is still good enough to do the trade.
GCI Friday closing price - 4.55
GCI is a major U.S. media company focused on digital transformation, owning brands like USA TODAY, local news outlets, and digital marketing services. The stock was in a big downtrend between July 2018 and May 2024 (from $18 down to $1) when it finally broke the downtrend. The breakout took the stock from where the 200-week MA was (at the time) at 3.28 and it rallied to 5.93, where it encountered some strong and established resistance that the bulls were unable to break. The stock then corrected and even got back down below the MA (likely because of some short-term negative news) to 2.55 and it stayed below the line for the next 16 weeks. In June of this year, the stock once again broke above the line and generated a rally back up to 4.45, and then the stock proceeded to test the breakout with a drop 6-weeks ago to 3.32. At the end of October the stock reported better than expected earnings and broke above 4.45, with a rally to 5.58, where it encountered some selling interest, causing the stock to close red the past 3 weeks.
GCI has now established itself above the 200 week MA and also generate a short-term breakout (above 4.45) and that makes it attractive and gives it a chance to continue the uptrend it has been on for the last 3 years, with the low at 1.62 now showing 4 successful retests of it with drops down to 1.66, to 1.95, to 2.55 and the recent one at 3.42.
GCI does have a fair amount or resistance levels above that will not be easy to break, at least not for the short term. The stock is showing intraweek resistance at 5.58, at 5.93 and at 7.05. All of these coming after the stock made the all-time low at .63 cents in 2020. Having said that, the stock has been building a major support base over the past 5 years, from which a move up to the $10 level could be seen in 2026. That will be the objective of this mention.
Purchases of GCI between 4.30 and 4.40 and having a stop loss 3.64 and a long-term objective of 9.70, will offer a 7-1 risk/reward ratio. My rating on the trade is 4 (on a scale of 1-5 with 5 being the highest). The only negative thing I can see on this trade is the time frame to achieve the gains, which are likely to be at least 6 months if not up to 1-year.
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Updates
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Closed Trades, Open Positions and Stop Loss Changes |
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| BCTX got down close to the all-time weekly closing low at 6.98, with a low on Friday at 6.88 and a close at 7.17. It is important to know that the stock made the all-time intraweek low at 6.00 in August and then tested it successfully in November with a 6.93 low. On this occasion, that low was broken with a 6.55 low made 2 weeks ago, which should have caused new selling to come in and a test of the 6.00 low to occur, but that has not happened as the stock rallied back to 7.90 and has now this past week saw two lows at 6.90 and Friday's 6.88. This does strongly suggest there is buying interest at this price, and given that on a weekly closing basis, the low held up (even though the stock traded down to 6.88 on Friday). There are 2 levels to watch for this week, with the first one being at 7.39 (200 10-minute MA that has not been broken to the upside for the past 16 days) and the 7.90 level, which is presently short-term pivotal intraweek resistance. If those 2 levels get broken this week, it would be a statement (as well as confirmation) that this recent downtrend is over. A drop below 6.55 would open the door for the 6.00 level to be seen. There has been no negative news on the stock, meaning that this 50% drop in price seen over the past few weeks, does not have a fundamental reason supporting it. GSTRF made a new 7-week high and closed near the high of the week, suggesting further upside above last week's high at .325 will be seen this week. The stock went up 50% in value this week and now shows a successful retest of the recent .21 weekly closing low and of the strong weekly close support at .20. In addition, a buy signal was also given when the stock closed on Friday above the most recent weekly closing high at ,275 and also above a previous and established resistance at .29 (closed on Friday at .299). This does suggest (if this breakout is confirmed this Friday), that the downtrend is over and that the bulls are now ready to take the stock higher. A confirmed daily close above .35 would give the bulls additional ammunition to get up to the .45 level, which is the next "pivotal" resistance level of consequence. Any daily close below .285 would weaken this outlook. LXRX made a new 15-week intraweek low and closed on the lower half of the week's trading range, suggesting further downside below last week's low at 1.11 will be seen this week. Having said that, on a weekly or daily closing basis, nothing was broken, meaning that it was generally an uneventful week. Intraweek support is found at 1.07. A daily close above 1.35 will take some ammunition away from the bears and a daily close above 1.42 would give the edge back to the bulls. The bears presently have the edge. NB generated a positive reversal week, having made a new 7-week low and then closing green and on the high of the week, suggesting further upside above last week's high at 5.99 will be seen this week. The green weekly close has made the previous week's close at 5.69 into a successful retest of the 5.19 low seen as the low of the correction, suggesting that the uptrend might now be resuming. Intraweek resistance is found at 6.27, at 6.49 and pivotal at 7.09. Pivotal support remains at 5.19, on both the daily and weekly closing charts. VWDRY generated a new 7-month intraweek, daily and weekly closing highs and closed on the high of the week, suggesting further upside above last week's high at 9.37 will be seen this week. Nonetheless, the stock is now nearing a level where there is decent resistance from all charts, around the 9.70 level. In addition, the $10 demilitarized zone is strong psychological resistance that will require positive fundamental news to break. Intraweek support is found between 8.28 and 8.55 that should not be broken if the bulls are to expect to see higher prices in the near future. ZLAB generated a red week and closed near the low of the week, suggesting further downside below last week's low at 17.18 will be seen this week. Nonetheless, the trading range was very small, suggesting that the selling interest might be waning. In addition, the stock made a 16-month intraweek low at 16.82 3 weeks ago and as such, a successful retest of that low is required needed, meaning that if the stock does go below 17.18 but does not beak 16.82 and the generates a green close this Friday, the necessary chart action to end the downtrend will have begun. There has been no negative fundamental news on the stock and the Chinese index rallied strongly on Friday, suggesting that the bulls are more likely than not to accomplish the above this week. Daily close support is at 17.00 and the bulls need to stay above that level every day this week. Short-term pivotal daily close resistance is at 18.58.
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1) ZLAB - Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 17.33. 2) VWDRY - Averaged long at 8.68 (4 mentions). No stop loss at present. Stock closed on Friday at 9.37. 3) LXRX - Averaged long at 1.513 (7 mentions). No stop loss at present. Stock closed on Friday at 1.14. 4) BCTX - Averaged long at 78.25 (2 mentions). Stock closed on Friday at 7.17. 5) GSTRF - Purchased at .42. No stop loss at present. Stock closed on Friday at .299. 6) NB - Purchased at 6.88. No stop loss at present. Stock closed on Friday at 5.95.
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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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