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Issue #945 
Jan 25, 2026 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Market ready to start a correction?
DOW Friday Closing Price - 49098 As far as the weekly closes on Friday. this past week was basically uneventful, given that with the exception of the NASDAQ (who closed minimally green), the indexes generated a minimally red week. There was a lot of movement during the week due to statements and actions by Trump, but other than establishing a new chart support base, the week did not generate any signal of any consequence. This coming week though, it likely to be the exact opposite as it will have the Fed Rate decision on Wednesday, which will help traders decide what is likely to happen in February, and then the weekly and monthly closes on Friday, which are likely to support the January seasonal tendency (to be an up month) as well as give clues as to whether the seasonal tendency for February (which is to be a down month), will have a good or poor chance to occur. The Fed is expected to leave rates unchanged (neither raise nor lower them) and given that is what is expected, it is not likely to give any ammunition to the bulls if that happens. The weekly closes are important given that if no new all-time highs are made in either the DOW or the SPX, after the last 2 weeks of red occurring, the bears will get new ammunition with which to push downward. And then also on Friday, the monthly closes occur and if they are in the lower half of the monthly trading ranges (DOW below 47843, SPX below 6888, NASDAQ below 25412 and the RUT below 2608), it will strongly suggest that February will be a red month (as the seasonal tendency is to be). It is also important to note that the DOW has generated 9 green months in a row and has increased in value 18% during that time, meaning that a correction to the rally is way overdue and highly likely to begin to happen in February. Adding to all of this, the US economy is showing multiple, distinct signs of cooling down and slowing from the robust, rapid growth experienced in mid-2025, according to data from late 2025 and early 2026. While a recession is not currently in effect, key indicators suggest a "low-hire, low-fire" environment is putting pressure on both consumers and businesses. Such a tangibly fundamental scenario, does suggest that selling interest will rise beginning this week. Here are the chart levels to watch for this week. In the DOW and to the upside, the 49633 level is intraweek resistance, and on a daily closing basis, it is at 49540 and on a weekly closing basis, it is at 49504. Any breaks above an of those levels, and especially is all 3 occur, it will give the bulls new ammunition. To the downside and on an intraweek and on a daily closing basis, support is at 48488, on a weekly closing basis, it is at 48134. In the SPX and to the upside, intraweek resistance is at 4986, on a daily closing basis, it is at 6977, and on a weekly closing basis, it is at 6966. To the downside, intraweek support is at 6789, on a daily closing basis, it is at 6796 and on a weekly closing basis, it is at 6827. In the NASDAQ and to the upside, intraweek resistance is sort-term indicative at 25873 and pivotal at 26182. On a daily closing basis and like on an intraweek basis, the two resistance levels are at 25787 and at 26119. On a weekly closing basis, those two are at 25766 and at 25858. The RUT generated a negative reversal week, opening the door for last week's intraweek high at 2735 being the top of this rally, That 2735 level is also intraweek resistance, on a daily closing basis, resistance is at 2718 and on a weekly closing basis, it is at 2677. To the downside, intraweek support is at 2632, on a daily closing basis, it is at 2645, and on a weekly closing basis, it is at 2508. The fact that the RUT generated a negative reversal week and that it also did not continue to outperform the market, does also suggest that a top to this rally and across the board (all indexes) is likely to be happening. A top to this rally would mean "all" indexes and not just one of them. Anyhow and with the chart information given above, we will all be able to determine what is happening at the end of the week. This will be an indicative week. HSI index generated an uneventful inside week but did close green and near the high of the week, suggesting further upside above last week's high at 26920 is expected to be seen this week. The bulls do have an edge (not full control) right now and the pivotal resistance levels are close by, which if broken would give control back to them. On a daily closing basis, a close above 26999 would give them additional ammunition and a close above 27074 would likely generate a move up to the 28,140 level. On the other side of the coin, a daily close below 26487 would weaken the chart. The index closed on Friday at 26749, meaning both support and resistance levels are close by. The bulls do have the edge right now.
GOLD(Feb 2026 chart) rallied $345 dollars this past week and did get up to the demilitarized $5,000 zone with a high at $4986. Gold did close on Friday at $4979, meaning further upside it to be seen this week. If the bulls are able to get above the top of the demilitarized zone at $5030, there is further open air above. Right now and due to the uncertainty of what Trump's actions will bring, people are flocking to Gold. Presently and in looking at the daily chart, there is no support until $4622. Nonetheless and using the "intraday" charts, there is some close by support at $4959 and a bit stronger at $4901, which if broken would suggest that the wider 300 point psychological/resistance support area (300 points above and below a major level such as $5000 is), would be targeted. The probabilities at this point and based on the present scenario, do strongly suggest that Gold will be trading in this $600 area (between $4700 and $5300) for the next few months. OIL generated an inside week but did close near the high of the week, suggesting further upside above last week's high at 61.36 will be seen this week. The bears had the edge on Thursday, and it seemed that Oil would be generating a red week, but then Trump threatened Iran with additional bombing and Oil had a reversal day on Friday, rallying over $2. Nonetheless and spite of that, the bulls failed to close above a recent and indicative weekly close resistance at 61.50 (closed at 61.05), meaning that nothing was decided. This week and on a daily closing basis, a close above 62.02 would give the bulls an additional edge, while a close below 58.97 would do the opposite. This week depends mostly on whether Trump takes actions on his words or not.
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Stock Analysis/Evaluation
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MENTIONS For this week
I do believe that it is a week to put on short positions. The probabilities do favor a correction happening in February. I did quite a bit of research (studied at least 80 different stocks/charts) and did find 4 stocks that have clear resistance and support levels that are dependable, and with charts that suggest the stock will go lower, just by the present make-up of the charts themselves. In other words, these 4 stocks are not just shorts because they are overbought or are at high prices.
SALES
AXP Friday Closing Price - 361.69
AXP made a new all-time intraweek and weekly closing high 7-weeks ago at 387.49 (382.56 weekly closing basis) and 4-weeks ago, that high was tested successfully with an intraweek high at 386.56. That retest was confirmed 3 weeks ago with a failure signal, when it closed below the previous all-time high weekly close at 368.54. That week (when the failure signal was given) the stock gapped down but there was no negative news to support the gap, suggesting that the gap will be closed. The stock closed in the upper half this week's trading range, suggesting further upside above last week's high at 370.10 will be seen, with closure of the gap up at 372.25 targeted. There is established intraweek resistance at 377.23, which could be targeted as well. On the daily chart, there is also intraweek resistance at 374.88, which will be the desired entry point.
With AXP already generating a failure signal, if the stock closes at that level (368.54) on Friday, and then generates a red weekly close the first week of February, and then generates a sell signal thereafter (a weekly close below 352.89, the target would then likely be one of the three previous high weekly closes (at 341.68, at 328.13 or at the first one at 321.34), with the latter being the most probable as it is the strongest, having lasted 3 months before broken. It should also be mentioned that the 200-day MA is currently at 324.80, and if this is a true correction, that line is a likely target. Nonetheless, any of the 3 targets given, reaching any of them, the risk/reward ratio is good.
Sales of AXP anywhere between 372.24 and 374.88 level and using a stop loss at 377.33 and having a target of 324.80, 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).
ORLY Friday Closing Price - 99.23
ORLY has been on a downtrend since September of last year when it made an all-time high at 108.72 and then corrected down to January's low at 89.12 (18%). The stock started the uptrend 9 years ago (2017) at 11.30 and is now facing a tough year, given that as an auto-parts supplier, the problems being presently seen are going to be tough to overcome. Not to mention the fact that the stock has built a clear downtrend recently, with an all-time high that has been tested successfully once and the chart suggests that this may be the 2nd retest of it, which does offer a clear stop loss area that offer a very good risk/reward ratio.
ORLY closed on the high of the week/month, suggesting further upside above last week's high and last month's high at 99.63 will be seen this week and in February. Nonetheless, the previous successful intraweek/intramonth retest was at 102.46, meaning that any rally above 99.63 (so that a desired entry point is reached) will offer less than a $2.50 (per share) risk factor. With the downtrend that is presently in effect, a drop down to the $85 level is the minimum to be offered (if the downtrend stays in effect, meaning that at the very least a 5-1 risk/reward ratio is seen.
Sales of ORLY above 99.63 and having a stop loss at 102.56 and having a minimum objective of 84.71, offers a 5-1 risk/reward ratio. My rating on the trade is a 3 (on a scale of 1-5 with 5 being the highest). My rating is not higher because the stock has been on a long-term uptrend in which an 18% correction has already occurred. Nonetheless, if this 102.46 level is not broken and the established and the decent intraweek and weekly close support around the $85 level is broken, the target would be at least the $78 level, if not the 200-week MA, currently at 70.69. As such, the trade is worth doing, though the probability number is not all that high.
CVX Friday Closing Price - 166.72
For the past 3 years, CVX has been in a clearly defined trading range between $132 and $172, even though during this time, Oil has been as low as $55 and as high as $79. This does suggest that the price of Oil does not affect the stock all that much. With that being said, it is evident that the price of the stock is near the high of that trading range, even though Oil is near the low of that trading range. Having said that, this trade mention is purely driven by the charts, with any potential positive or negatives put aside.
CVX has been near the highs of that trading range on 3 previous occasions (meaning that this occasion is the 4th) and that means this resistance area is decent to strong and somewhat dependable. In April of last year (when Oil was at its low level), the stock made a new 33-month low, reaching the $132 level, and since then the stock has rallied 23%, meaning that it is presently overbought and near resistance. By the same token and looking at the Oil chart, it does not seem likely that the $55 level will be broken any time soon. This means that the objective of this trade is only the $150 level, meaning that the most recent intraweek low at 147.75 does not seem to be at risk of being broken at this time.
Sales of CVX above 169.66 and using a stop loss at 172.64 and having a 149.91 objective, offers a 6-1 risk/reward ratio. My rating on the trade is a 3 (on a scale of 1-5 with 5 being the highest). My normal rating on this trade would be a 4 but with Trump being so unpredictable and recently threatening Iran with bombing them, which would cause Oil to rally substantially, the rating is lower. By the same token, this being purely a chart trade and the resistance and support level being so clear, it is a doable trade.
AKAM Friday Closing Price - 48.20
AKAM is a leading cloud computing, security, and content delivery network (CDN) provider that got to an all-time intraweek high of 129.17 in January 2024, and has been on a downtrend since then, with a low being made 10 months ago at 67.51, when the stock got down to the 200-month MA. In November, the stock rallied and broke an intramonth resistance level at 84.15, which suggested that the downtrend is over. Having said that though, the stock has yet to confirm that the downtrend is over, given that to do so, it would need to break above an indicative intramonth high at 108.75. Until that happens, the bears remain with the edge. With the overall market likely to be in a corrective scenario, it should mean there is still some good downside to be seen in the stock.
AKAM is likely to close near the high of the month on Friday, suggesting further upside will be seen at the beginning of the month next week. As such, this mention is more likely to see the desired entry point next week (rather than this week), but given that the resistance levels are clear, if the desired entry point is reached this week, consideration for going short now, should be given.
AKAM also closed near the high of the week this week and further upside above last week's high at 97.57 should be seen at the start of the week. The desired entry point is 100.39, with a clear stop loss point at 103.85, which is an intraweek and intramonth resistance level that would confirm that the downtrend is over and that the bulls have control.
To the downside and being the objective of the trade, AKAM shows intraweek support at 84.70 that is unlikely to be broken. There is also support at 87.58, at 88.50 and at 90.55, with the former likely to be reached, but it could happen that it isn't reached. This means that 90.55 is a clear objective but another $2-$5 lower could be seen.
Sales of AKAM around the 100.39 level and using a stop loss at 103,85 and having an objective of 87.58, offers a 3.7-1 risk/reward ratio. My rating on the trade is a 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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| BCTX had another uneventful week where nothing indicative happened. By the same token "some" support base-building action was seen but of a minor nature. What this base-building action suggests is that a break above 4.55 or below 4.17, could generate some new buying of selling interest. Nonetheless, neither of these 2 levels are pivotal in any way, shape, or form. The indicative levels right now are at 7.00 and at 4.00. It is unlikely that either will be broken anytime soon. GSTRF generated a red week and closed in the lower half of the week's trading range, suggesting further downside below last week's low at .209 will be seen this week. There is pivotal intraweek support at .183 and resistance at .30. It is unlikely either will be seen and much less broken this week. On a daily and weekly basis, the .20 level is important support. I do believe the probability favors a positive reversal week. LXRX generated a new 3-month intraweek and weekly closing high and closed near the high of the week, suggesting further upside above last week's high at 1.83 will be seen this week. The stock closed exactly at the 200-day MA, currently at 1.69 (closed at 1.70) and that is an indicative resistance level line that has been broken 3 times in the past 5 years but in all 3 occasions, the break of the line was negated the following week. There is intraweek resistance at 2.17 and at 2.45 and strongly pivotal at 3.73. A break above the first resistance level would confirm the break of the MA line, if and when it is confirmed the following week. Indicative weekly close support is found between 1.49 and 1.52, which if broken, would give control back to the bears. On a daily closing basis, support is found at 1.64 (likely to be seen) but if that level holds up, the bulls will likely test the 2.17 level. NB generated a positive reversal week and closed on the high of the week, suggesting further upside above the 8.05 level will be seen this week. The new 11-week intraweek and weekly closing high broke an important and indicative resistance at 7.83 and 7.13, meaning there is open air above to test the all-time high weekly close resistance at 10.39 (12.58 on an intraweek basis). Indicative daily close support is now found at 6.90 and pivotal at 6.30. WVE generated a new 6-week intraweek and weekly closing low and closed near the low of the week, suggesting further downside below last week's low at 13.22 will be seen this week. The weekly close support at 13.67 was broken (closed on Friday at 13.47), meaning that the bulls need to negate that break this week on Friday. 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 red week and closed near the low of the week, suggesting further downside below last week's low at 18.00 will be seen this week. The stock did generate a very small trading range week and broke the previous week's low by only $01 cents, suggesting that the selling interest is minimal. Over the past 4 weeks, the stock has built an up channel with higher highs starting at 19.01, followed by 19.32 and 19.83 and on the bottom of the channel, the starting one is at 16.82, which was followed by 17.17. As long as the 17.17 level does not get broken, the up-channel remains intact. A daily close above 19,83 would suggest the 20.60 level will be tested and if broken (on a weekly closing basis, the $25 level will become the objective.
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1) ZLAB - Averaged long at 65.50 (7 mentions). No stop loss at present. Stock closed on Friday at 18.33. 2) LXRX - Averaged long at 1.513 (7 mentions). No stop loss at present. Stock closed on Friday at 1.70. 3) BCTX - Averaged long at 78.25 (2 mentions). Stock closed on Friday at 4.35. 4) GSTRF - Purchased at .42. No stop loss at present. Stock closed on Friday at .223. 5) NB - Purchased at 6.88. No stop loss at present. Stock closed on Friday at 7.70. 6) WVE - Averaged long at 15.75. No stop loos at present. Stock closed on Friday at 13.47. 7) USAR - Shorted at 19.97. Covered shorts at 20.35. Loss on the trade of $38 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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