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Issue #946 
Jan 18, 2026 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Action suggests that the traders are waiting for Fed News but if expectations are met, selling should occcur.
DOW Friday Closing Price - 49359 The DOW and the SPX both made new all-time intraweek highs and the NASDAQ made a new 10-week high but all 3 of them closed red (below last week's closes). This is "technically considered a negative reversal but given that the first two closed near the high of the week or in the upper half of the week's trading ranges, it is not a dependable negative reversal. Having said that, the NASDAQ closed slightly in the lower half of the week's trading range and the RUT outperformed all indexes last week (spiking up 5.4% and outperforming all other indexes for the past couple of weeks), these are dependable signs that a top to this rally (if not to the uptrend) is close by. The traders are not likely to make any statements this week, given that what they are waiting for is the Fed Rate decision that is scheduled to be released the following Wednesday (the 28th) at 2:00pm. Expectation by 95% of all economists is for the Fed to hold interest rates steady (no cut or raise). This Thursday, the PCE inflation report is due to be released and that is always a report that the traders pay close attention to. Nonetheless, the CPI report this past week came in slightly lower than anticipated, suggesting the PCE report is not likely to be out of line (anticipated to be .2%). As such, it is highly unlikely that anything indicative will happen this week. If the Fed does as expected (no raise or cut), the traders will likely see that in a negative light given the high prices and overbought condition of the index market does not support higher prices. In addition, there has been signs that the economy is slowing down, which would at least support a correction occurring. In addition, the overperformance of the RUT (especially this past week) means that the big money is starting to leave the big stocks and go into the small cap market, which also strongly supports at least a correction occurring. Having said all of the above and now looking at the charts, here are the levels to look out for, in case something indicative does occur. In the DOW and to the upside, the 50,000 demilitarized zone is psychological resistance of note. To the downside, the level to watch is 47,853. In the SPX the 7,000 demilitarized zone is also psychological resistance (which by the way, the index has arrived at with this week's high at 6986), and to the downside, the 6824 level is short-term indicative support and the 6723 level is likely midterm indicative. The NASDAQ is the index to watch this week and next, given that it has normally been the leader to the upside, and to the downside. The all-time intraweek high at 26182 Is indicative resistance and the 25,086 is indicative support. Like with the SPX it does have short-term support at 25,256. It is evident right now that if the RUT ceases to be the leader (and the NAZ take over) that the bulls are back in control. For the index to lose its recent leadership, it would need to drop below 2480. Continuation to the upside is likely to happen and it would not change the outlook given above. I have now given you all the levels of importance, but I do not believe any of them are at risk of being broken this week, unless some news not related to the economy is released. With Trump in office, that is always a possibility. HSI index generated a new 15-week intraweek and weekly closing high and in the process broke a weekly close resistance at 26672 (closed at 26844) that strongly suggests that the 55-month weekly closing high at 27140 will be at least tested over the next 1-3 weeks. If that level is broken, there is open air for another 1040 points (up to 28180). The previous high weekly close at 26672 is now support, as a close below it would give a failure signal to the strength seen this past week. On a daily closing basis, the level of support is now 26710 and there are 2 levels of resistance at 27073 and at 27287. On a fundamental basis, these are the reasons given for the strength: "The Hang Seng Index is showing strength due to a mix of factors, primarily renewed investor confidence from Chinese government stimulus measures, easing regulatory crackdowns, strong performance in AI and tech stocks, abating real estate fears, and the index being seen as undervalued after poor performance, attracting capital inflows and bargain hunting. Anticipation of further easing by China's central bank (PBOC) and positive earnings outlooks also fuel optimism".
GOLD(Feb 2026 chart) generated another new all-time intra week and weekly closing high (at $4650 and at $4595) and closed in the upper half of the week's trading range, suggesting further upside above $4650 will be seen this week. Gold continues to rise with no chart or fundamental reasons (so far) for that to change this week. The Fed rate decision on the 28th might change that but the probabilities favor further upside. As far as the chart is concerned, a confirmed daily close below $4527 would generate a sign that a potential rally top has been found. OIL Oil did "exactly" as expected this past week with a rally to the $62 level but not breaking above 62.56. As such, the short-term sideways trend continues for likely another week. Oil did close in the lower half of the week's trading range, suggesting further downside below last week's low at 58.46 is likely to be seen this week. Likely pivotal intraweek support is found at 55.76 and definitely pivotal at 54.98. A rally above 62.56 would give the bull the edge. Likely trading range for this week is 57.10 to 60.50.
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Stock Analysis/Evaluation
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MENTIONS For this week
I do believe that it is time to start looking for short-trades. This week is not likely to generate any profit on short-trades but desired entry points might be reached. Nonetheless, the probabilities favor shorting stocks the following week, so the mentions this week should only be considered if the desired entry points are reached, and even then they should only be considered if reached before Friday, because if reached Friday, it will mean that further upside will likely come on the start of the following seek.
SALES
IBM Friday Closing Price - 305.67
IBM made a new all-time intraweek high 11-weeks ago at 324.90. That high rid receive a retest of it 7-weeks ago with a high at 313.35 but last week, the stock got up to 312.81 and did close out the week by closing in the upper half of the week's trading range, suggesting further upside above that level will be seen this week, which in turn would suggest that the retest high could be broken. If that happens, the previous intraweek high at 319.35 (before the all-time high was made) will be targeted. If that all happens this week before Thursday, it would mean that a good risk/reward ratio on the trade would happen and that a decent probability rating would be given. As such, the desired entry point will be above $319.
To the downside and as a possible/probable downside target, IBM's previous all-time high weekly close is at 291.97 but if this is a true correction that is to happen, a drop all the way down to $261 would likely occur. Either way, if the desired entry point is reached, the short trade offers a good risk/reward ratio.
A sale of IBM at 319.00 and using a stop loss at 325.00 and having at 292.00 objective, offers a 4.5-1 risk/reward ratio and with a drop down to $261, the ratio becomes a 9-1. My rating on the trade is a 3.25 on a scale of 1-5 with 5 being the high.
USAR Friday Closing Price - 17.69
USAR is a rare earth mining company that shows a chart that has a clearly defined trading range of support and resistance. The stock is closer to the resistance level than to the support level and if it reaches the resistance level this coming week or next, it a high probability short position if there are no announced fundamental changes.
USAR closed in the upper half of the week's trading range, suggesting further upside above last week's high at 19.18 will be seen this week. There are 2 intraweek resistance levels above and of consequence at 19.68 and at 20.00. With the $20 level also being psychological resistance, a stop loss at 20.35 seems very appropriate as to a breakout occurring from the likely trading range the stock is in at this time.
To the downside, USAR has established intraweek support at 13.87 and pivotal support at 11.72. Under the present circumstances, the stock is highly likely to trade between 19.68 and 13.87 until some new fundamental news is released.
As such, a sale of USAR around the 19.67 level and using a stop loss at 20.35 and having at 13.87 objective will offer an 8-1 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 made new all-time intraweek and weekly closing low and closed on the low of the week, suggesting further downside below last week's low at 4.12 will be seen this week. The new all-time low was caused because the company sold an additional $30 million in shares at 5.56, which increased the amount of shares by almost 5.4 million shares. This was done to obtain funds to put into effect the needed advertising, producing, delivering, and etc. actions to get the new drugs out for them to be sold successfulluy. These are the drugs that have recently been found to be successful at the illnesses they are meant to cure/help. In the long run this move is likely to be successful to the tune of the stock reaching its upside potential, but while this gets done, the stock is likely to trade under the $7 level for several months. There is no support below but given that the sale of shares was successful at 5.56, I would think that level should be reached shortly. GSTRF generated a positive reversal week, having gone below last week's low but then closing green and on the high of the week, suggesting further upside above last week's high at .25 will be seen this week. If that occurs, the low at .183 will have a 2nd successful retest of it. The green weekly close does show that the important weekly close support at .20 has also received 2 successful retests of that level, further strengthening the hand of the bulls. Confirmation of the recovery rally that is being seen will occur if the stock generates a weekly close above .30, given that a close above that level would not only be above the recent high weekly close but above an important and "established" close at .29 that was made in February. Any daily close below .225 would weaken the chart, while a close below .20 would give control to the bears. LXRX generated a new buy signal as well as a failure signal against the bears, having closed above the most recent high weekly close at 1.23 and closing above the weekly close support at 1.25, which when broken, took the stock down to 1.11. The stock closed on the high of the week, suggesting further upside above last week's high at 1.41 will be seen this week. There is intraweek resistance at 1.43 and at 1.48, which if broken would suggest the double high at 1.66/1.64 would be tested. A weekly close above the 200-week MA, currently at 1.69, would be a bull statement. Pivotal daily close support is now once again found at 1.25. NB generated a new 10-week intraweek and weekly closing high and in the process, generated a new buy signal on the weekly closing chart. Nonetheless, the buy signal was not convincing given that the stock traded above a pivotal weekly close resistance level at 7.13 (traded as high as 7.30) but then fell back to close in the lower half of the week's trading range suggesting that further downside below last week's low at 6.16 will be seen this week. In addition, a buy signal was also given on the daily chart but then, the buy signal was not confirmed and a failure signal against the bulls given. With these failures as well as the probability of the market starting a correction next week, consideration should be given to liquidating the positions if the stock rallies but fails to generate a daily close above 6.90. Any daily close below 6.26 would now be seen as a negative sign. WVE generated a new 5-week intraweek and weekly closing low and closed on the low of the week, suggesting further downside below last week's low at 13.45 will be seen this week. Intraweek support is found at 12.60 (12.85 on a daily closing basis) that is likely to be seen but unlikely to be broken. A rally back to 16.74 (16.44 on a daily and weekly closing basis) will likely be the short-term target if that support level holds up. A break below 12.60 would suggest the $10 level would be targeted. ZLAB generated a new 6-week intraweek high but then fell back to close in the lower half of the week's trading range, suggesting further downside below last week's low at 18.01 will be seen this week. If that does happen, the bulls will lose a bit of their recent edge given that the 18.01 level is now seen as the 2nd successful retest of the recent low. Then again, the first retest also broke the previous retest of the low but then negated that break 2 days later. On the weekly chart, pivotal support is at 17.18, meaning that as long as that does not break, the bulls have a small short-term edge. Daily close resistance is now found at 19.61 and again at 20.41, with pivotal intraweek resistance at 20.63. With the Chinese market showing some strength, it is unlikely the bears will gain any new strength.
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1) ZLAB - Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 18.58. 2) WVE - Purchased at 16.03 and at 15.47. Averaged long 15.75 (2 mendtions. Stop loss is at 12.50. Stock closed on Friday at 13.65. 3) LXRX - Averaged long at 1.513 (7 mentions). No stop loss at present. Stock closed on Friday at 1.38. 4) BCTX - Averaged long at 78.25 (2 mentions). Stock closed on Friday at 4.29. 5) GSTRF - Purchased at .42. No stop loss at present. Stock closed on Friday at .245. 6) NB - Purchased at 6.88. Stop loss now at 6.16. Stock closed on Friday at 6.61.
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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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