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Issue #82 
July 27, 2008 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Have the Indexes Topped Out? Major Decision Week Ahead!
DOW Friday close at 11370
The DOW did everything it was expected to do this week with a re-test of the previous high made in May of last year at 11700, as well as a re-test of the 200-week MA at the same price. Though it takes two weeks before it can be confirmed that the re-test was successful, the action at the end of the week has increased the probabilities that the high of this rally was seen this past week and that the index is now starting to head back down.
It is likely that this coming week the bulls will attempt to re-establish the strength they enjoyed at the beginning of last week. Nonetheless, with the weakness seen last Thursday as well as the insubstantial close on Friday, it is likely the index will "tread water" and trade choppily for the first few days of the week. There are several reports of consequence due out this coming week and until those are made known, it is unlikely the index will make any decisive moves.
Resistance is major up at 11700, from both the 200-week MA as well as the high made this week. There is one additional resistance of consequence this week at 11497. That was the "monthly" closing high seen back in the year 2000 and with Thursday being the end of the month, that resistance level will come into play. That monthly high stood up for close to 7 years and though traders rarely use monthly closes, this one is of great importance and will be watched. On a daily closing basis there is also some minor resistance at 11497. Intra-day resistance will be found at 11600. Support is minor but evident at 11317, where the 20-week MA is currently located. Additional support is seen between 11216 and 11232 where two previous daily low closes as well as a previous daily close high have been made. Intra-day there is minor support at 11183, at 11121, and at 10978. Nonetheless, on the weekly chart if the 20-week MA at 11317 is broken, the likelihood of a drop back down to 10978 is very high. Major support is found, on both the daily and weekly charts, between 10700 and 10739.
It is highly likely the high for this rally, and perhaps for a long time, was seen this past week in the DOW. There is an outside possibility of a rally this week up to 11750, if the bulls are able to generate some strength at the beginning of the week. The 11750 level was a "major" intra-week high seen back in the year 2000 and one that lasted for over 6 years before being taken out. Nonetheless, the resistance up at 11700 is very strong and of a more recent nature and therefore the DOW would need to have some bullish news come out this week for that higher level to be reached.
Due to the fact that the end of the month is on Thursday, after some important reports come out (GDP and unemployment numbers), the indexes will likely pivot most of the week around 11497 as that was the monthly close back in the year 2000. It is interesting to note that the important reports come out on the last day of the month and will definitely have an impact on the monthly close. Monthly closes generally are not very important or used by traders, but this month is different because of the price level it represents.
Overall, though, the chart is beginning to look quite negative as the index backed of substantially from the major resistance up at 11700 (11643 on a daily closing basis). If the DOW is unable to close above 11497 on Thursday, or above 11577 on Friday, drops down to the 10700 level over the next few weeks will be anticipated. One more additional negative to mention. Back in the year 2000, when the DOW had a monthly high at 10497 and a intra-week high at 11750, the index fell down to 10700 by the end of the following month and down to 9732 the month after that. The chart looks eerily similar and therefore that kind of a drop over the next two months is certainly possible.
Based on the last week's range, I would say the probable trading range for the DOW this week will be 11603 to 11216.
NASDAQ Friday Close at 2310
Once again the NASDAQ outperformed the DOW this week. It is important to note that every time that has happened over the past 2 years it seems the market is ready to have a strong drop. Nonetheless, the NASDAQ did have a positive close on Friday when it closed above the 200-week MA at 2302. The close above the line was only by a few ticks so it cannot be said it was definitive, but it was a positive. Of course, a break of a line does need confirmation with another close above the line next week so the positive nature of the close has to be tempered with caution, especially since this coming week promises to be indicative of what the indexes will do in the near future.
The NASDAQ did have a high this past week of 2350. That rally was right into a resistance area (on a daily closing basis) but was not high enough to actually test the intra-day resistance at 2367 as well as the 20-week MA at that price. It is likely this coming week the NASDAQ will continue to outperform the DOW and when that index rallies to its anticipated weekly high at 11600, it is likely the NASDAQ will get up to that line.
Nonetheless, unless the reports coming out this week are overly bullish, it is unlikely that the NASDAQ will be able to confirm a break above the 200-week MA at 2302 next Friday. It is therefore anticipated that any rallies seen in the NASDAQ this coming week will be sold aggressively.
On a daily closing basis, resistance is very strong at 2343 and major at 2371. Decent resistance is also found at 2326, which was the daily closing high this past week. Support, on a daily closing basis, is very strong now at 2280 as there is a double bottom, as well as the 20-day MA, at that price. Below that there is decent support at 2243 and again at 2213. Major support down between 2169 and 2177. Monthly support (Wednesday's close) is strong and also quite important at 2271.
This coming week is evidently very important, as a statement of consequence will likely be made. The weekly close next Friday will offer strong clues as to what the index will do for the next month or two. A close next Friday below 2302 will be a signal that the index has failed and heading lower. Should the close on Thursday (monthly close) be below 2271 that would also be a strong sell signal. Any weekly close below 2212 will likely generate a move down to the 2000 level over the next month. A close next Friday above 2371 would be bullish. With the index having such close-by levels of importance on both sides of the coin, this coming week could be decisive in deciphering what the indexes will be doing this coming month.
Based on this past week's range, the range for the week could be 2367 to 2270.
S&Poors 500 Friday close at 1258
The SPX failed to stage any kind of a meaningful rally this week and fell far short of getting anywhere near its 200-week MA, in direct contrast to the DOW and the NASDAQ. In addition, the index closed near the lows of the week which indicates a high likelihood of lower lows next week and threatens that this past week was a spike high. In the past, the SPX has been known to be the chart leader of the indexes and if this week's action in the SPX is any indication of what the indexes will be doing from here on in, I would have to say "lower".
The SPX was unable to get close to the 200-week MA it broke below a few weeks ago and was only able to reach the high (1292) made the week "after" the break of the MA. The inability of the index to accomplish any more than that, is indicative of strong selling in this index, more so than in the others. In addition, the index closed lower on Friday than last week and that seems to suggest that the major weekly close support at 1236 will be tested this coming week.
On an intra-day basis, resistance is now very strong at 1291 and major at 1327. Some decent resistance will now be found at 1277/1280 as well. Support is minor at 1249 and at 1225. On a daily closing basis, support is very strong at 1224/1228, strong at 1180 and major at 1138. On a weekly closing basis support is very strong at 1236/1239, strong again at 1180, and major at 1141/1143.
The high made on Wednesday at 1291 and subsequent spike-type drop on Thursday to 1251, has put the index under pressure. If the SPX is unable to rally up to and above 1277 this week and is able to break intra-day below 1249. A drop down to 1225 will likely occur. Such a drop would put the index under strong selling pressure and on the defensive, as the strong weekly support at 1236 would be in peril. Under such a scenario, the probabilities of making a new 34-month low below 1200, would increase exponentially.
As with the other indexes, it is likely the SPX will trade choppily and within a narrow trading range for the first part of the week.
Probable range for the week in the SPX is 1277-1225.
The indexes have given indications that the high of this latest rally may have been seen this week. With the bear market scenario the indexes find themselves in, it is evident the marketplace needs fundamental help in order to generate any further rally or even to maintain themselves at these levels. With GDP coming out on Wednesday and unemployment numbers coming out on Thursday, it is likely that at this sensitive stage, the markets will react aggressively to those reports, especially if they are negative.
This week is a pivotal one, seen only once every so often. In order to prevent the monthly charts from looking very negative, I am sure the bulls and the bears will be aggressive and do everything in their power to generate the kind of monthly close that is needed to support their views. It's important to note, though, that on the DOW the same price (11497), on a weekly and monthly basis, is pivotal. It means that fireworks will likely be seen on Thursday and Friday.
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Stock Analysis/Evaluation
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CHART Outlooks
With the probability of the indexes having topped out this past week and the market in a bear trend, all the mentions this week will be short positions. In most cases, though, a small rally at the beginning of the week is being anticipated and the desired entry points will require that the stocks rally.
HPQ (Friday Close at 43.71)
HPQ is a stock that has been in a clearly defined sideways trading range between $40 and $50 since January. Nonetheless, 4 weeks ago the stock broke below the 100-week MA for the first time since March 2005 and has since confirmed the break with several additional closes below the line. This past week HPQ rallied back up to the 100-week MA but was unable to get above it, and ended up the week without being able to show any progress from the rally. With the probability that the indexes will begin a new downtrend by the end of the week, it seems likely the stock will be heading back down to at least the $40 level. In addition, there is a distinct possibility the stock is no longer in a sideways trend and is at the start of a downtrend.
With the failure this past week to get above the 100-week MA, at a time the stock indexes were at their strongest point, it seems likely the sellers will get aggressive this week and go for the break of the support at the $40 level.
On a weekly closing basis, resistance is very strong between 44.42 and 45.81. In addition to the 100-week MA currently at 44.80, there have been 7 weekly closes between those two levels since April of last year, one of which, was an important recent support at 44.96 that caused the recent drop in price when broken. On a daily closing basis, there are 3 previous closes between 44.42 and 44.81 that loom strong. On an intra-day basis, the 100-day MA is currently at 45.14. Support, on an intra-day basis, is very decent at 42.66, as there have been 3 very visible intra-day lows at that price. Some intra-day support is found at 40.83 and much stronger at 39.99. On a daily closing basis, support is decent between 43.19 and 43.38 and major at 40.50. On a weekly closing basis, the stock shows a double bottom at 41.60/41.80 that has given the stock its recent support. Below $40 there is some decent support at 38.15. If that level is broken then a drop down to the 200-week MA at 35.50 would likely occur.
It is evident that HPQ is presently under some pressure due to the confirmed break of the 100-week MA. The recent double bottom on the weekly chart has helped the stock stay afloat over the past few weeks but the stock has been unable to mount a rally above the $45 level. If the indexes re-start their downtrend, it is likely that HPQ will at least re-test the sideways trading range support at $40. If that happens, it is also possible and maybe even probable that the support will break and the stock get into its own downtrend.
Sales of HPQ between 44.38 and 44.96 and placing a stop loss at 45.55 and having an objective of 40.50 will offer a 4-1 risk/reward ratio. Nonetheless, should the $40 level break a drop down to 35.50 would be the objective and that would offer a 9-1 risk/reward ratio.
My rating on the trade is a 7.5 (on a scale of 1-10 with the strongest probability rating being 10).
HON (Friday close at 50.84)
HON broke below a 14-month trading range between $53 and $63 in June of this year and is now trying to establish a new trading range in which the stock will trade for the next year or so. Over the past two weeks the stock has re-tested the breakdown level at $53 successfully and now seems poised to head lower and seek a new support base, based on the indexes having topped out.
The weekly closing chart does show an inverted flag formation, which if broken (a weekly close below 49.23) would project down to the $43 level. In addition, in looking at the 10-year charts and the first time the stock saw a break of support like this one, the stock fell from 63.87 down to 42.25. With the 9-year high seen in May of this year at 62.99 a drop down to the $42 seems like a good possibility.
Intra-day resistance is very strong up at the recent rally high at 53.71. In addition, on a weekly closing basis, there is strong resistance at the 200-week MA and most recent daily high close at 52.70. Decent support is found between 49.14 and 50.46, from the 20-day MA as well as several daily closes in that range. Strong support from the recent daily closing low at 47.86 (46.67 intra-day). Strong support is seen as well at 45.50, from the 200-week MA, and then down at 42.25 from a couple of major intra-day lows back in 1999.
HON has now done everything it needs to do, including a re-test of that level, to confirm the break of support at $53. The stock now has to seek the support that will be used for the next year. Seeing that the stock traded between $63 and $52 for close to a year, it is now likely that that a range between $53 and $42 could follow, especially if the indexes do make new lows on this next drop.
Sales of HON between 52.40 and 52.70 and placing a stop loss at 53.81 and having an objective of 42.25 will offer a risk/reward ratio of 7-1. Even if the stock only drops down to the 200-week MA currently at 45.50, the risk/reward ratio would still be 5-1.
My rating on the trade is a 7 (on a scale of 1-10 with the strongest probability rating being 10).
WDC (Friday close at 30.94)
WDC fell strongly on Friday on a better-than-expected earnings report but a much lower than expected outlook. In addition, the stock received a downgrade in the process as well. The stock gapped below the 20-week and 100-day MA and also broke below the 200-day MA intra-day. though it did not close below it. The weekly close was below the breakout level at 31.47 and if that break is confirmed next week, would also give a failure-to-follow-through signal that would put strong selling pressure on the stock.
WDC had been on a strong weekly up-trend since April of last year, but in June the stock topped out and was in a corrective phase before this report came out. The weekly chart does show sufficient peaks and valleys to confirm that the highs have been tested successfully. With the negativity of this earnings report the stock is now under selling pressure and it will be up to the bulls to prove the sellers wrong. With the indexes likely to get back into a downtrend beginning this week, it makes a short position attractive.
On an intra-day basis, resistance is very decent between 31.53 and 31.70 from two previous intra-day highs of consequence. In addition, the top of the gap area is at 31.41 making that entire level strong. On a weekly closing basis, resistance is also very strong at the same level with previous weekly high closes (3 of them) all running between 31.27 and 31.47. Added resistance will be seen at 32.62 from the 100-day MA that was broken. Intra-day support is decent at 28.22 and on a daily closing basis at 29.06. Support will also be found at 30.00 from the 200-day MA as well as psychological. Below 28.22 some minor support is found between 26.14 and 26.54. Major support will be found between 23.64 and 24.18 from a previous major weekly closing high as well as a major previous weekly closing low. In addition, on the daily chart, there is a double bottom at 23.64.
It seems probable that if WDC is unable to negate Friday's major drop in price, continues to close at or below the now important resistance level at 31.57, on the daily and weekly closing charts, and is able to break the 200-day MA on a daily closing basis, that the objective is likely to be the 200-week MA at 23.64.
With the gap area being at the same level as previous and important intra-day highs, the risk is highly controlled and the reward is high.
Sales of WDC between 31.30 and 31.50 and using a stop loss at 32.77 and having an objective of 23.64 will offer a risk/reward ratio of 7-1.
My rating on the trade is a 7 (on a scale of 1-10 with the strongest probability rating being 10).
NTES (Friday closing price 22.87)
NTES is a stock I mentioned as a short several weeks ago and picked up a profit of $2 on the trade. The stock was upgraded by Credit Suisse on July 21st and because of the oversold condition, the stock managed to gap up and generate a strong 1-week rally. Nonetheless, the stock has now reached levels where major resistance exists and with no other news, other than the upgrade, the stock seems to be faltering.
NTES did leave a gap open at 20.55 and since the gap was not due to a change of fundamentals it seems unlikely the gap will remain open. In addition, this is also a stock that generally follows the indexes and with the likelihood of the indexes dropping from these levels, it also seems likely that NTES will follow.
On an intra-day basis, resistance is very decent at 23.70 and very strong up at 24.00-24.12. On a daily closing basis, resistance is very strong between 23.35 and 23.45. On a weekly closing basis, strong resistance is at 22.90. Major resistance up at 24.90. Intra-day support is decent between 21.85 and 22.00, again at 21.30 where a previous intra-day low of consequence is found as well as the 20 and 100 day MA's. Support again is strong at 20.30 with a previous intra-day low as well as the 200-day MA. On a daily closing basis, support is strong at 20.81 and major at 19.28. On a weekly closing basis, support is strong at 20.57 and then major between 17.24 and 17.60 with two major weekly closing lows as well as the 200-week MA at that price.
It seems likely that the resistance up between 23.35 and 24.12 will be able to stop any further rallies unless some new fundamental news comes out. The open gap is down to 20.55 and going back down to that level seems highly probable, as it is also an important daily and weekly closing support.
Sales of NTES between 23.30 and 23.70 and using a stop loss at 24.22 and having an objective of 20.55 will offer a risk/reward ratio of 4-1. If the indexes do sustain a break it is possible that the stock would drop down to $19 or even down to $17. The risk/reward ratio would climb to 6-1 or better.
My rating on the trade is a 6.5 (on a scale of 1-10 with the strongest probability rating being 10).
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Updates
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| Updates on Held Stocks
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Open Positions and stop loss changes
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| NUAN failed to generate any further rallies this past week after having broken above the 100-week MA the week before. In addition, the close on Friday was lower than the previous week and confirmed that close at 16.42 as a successful re-test of the previous strong support level (now resistance) at 16.33-16.49. Such a successful re-test of a previous important low now puts the stock back on the defensive and needing some strong news this week to generate further upside. A close any day above 17.08 (previous high close as well as 50-day MA) would be a positive while a daily or weekly close below 15.50 (100-week and 20-day MA's) would be a strong negative. Major support, on a weekly closing basis, continues to be down at $15. On a very short-term basis, the 15.90 level is important support on the intra-day chart. A break of that support will put added selling pressure on the stock. Chart is not clear as to what direction the stock will likely take from here but the parameters are clear and should be followed if any of the levels mentioned above are broken. ELON is nearing an area of strong resistance between 14.09 and 14.72. It is likely that sometime this week the stock will get up to that level as Friday's high was 13.90. Nonetheless, there is a mountain of resistance on the charts above $14 and the stock will need some fundamental news or catalyst to continue higher. On a weekly closing basis, there is a previous important close at 14.72 as well as the 100-week MA currently seen at 14.29. On the daily chart there are 7 previous daily closes between 14.02 and 14.29 as well as 17 previous intra-day highs between 14.09 and 14.72. Such a conglomeration of highs makes this area major resistance. In addition, the 200-day MA is currently at 15.01 and dropping. The stock has an open gap between 11.23 and 11.54 that will become a magnet if the stock starts looking weak. It is likely the stock will maintain some strength the early part of the week and reach up above 14.00 but if the indexes get hit this week with negative reports, it is unlikely that ELON will be able to go higher or stay at these levels. Nonetheless, a break above $15 at this time, especially if it comes with another gap (runaway gap) would thrust the stock substantially higher. STP gave up all of last week's gains and closed below an important weekly close at 34.35. On a weekly closing basis, the stock has another decent support at 31.70 and a major support at 30.70. Nonetheless, the failure to rally up to the $40 this past week must be seen as a negative. On a positive side, the stock did drop into an area of previous intra-week support between 31.41 and 31.76 and then was able to generate a reversal and close in the green. Some follow through to the upside is expected the first part of this coming week. The one magnet that continues to draw the sellers is an open gap between 30.80 and 31.79. The stock did get into that gap on Friday with the low at 31.57 but the buyers were able to prevent its closure. As long as that gap is open the sellers will push hard for closure, if the stock shows weakness. Resistance will now be strong at 34.50. YGE was able to maintain itself above an important weekly close support level on Friday in spite of the general weakness seen in the solar stocks. The stock recently had a 52-week new weekly closing low at 14.10 that had been reversed over the past two weeks. This week the stock was re-testing that weekly closing low but needed to hold above the weekly closing lows prior to the 14.10, which were are 14.50 and 14.73. With the close being 14.93, if the stock is able to close higher next Friday, it will be said the weekly support levels have been successfully tested and the stock should begin an up-trend thereafter. A rally above this week's high at 16.90 will confirm the successful re-test and likely generate a rally up to 19.20. Support, on an intra-day basis, should now be decent at 14.36-14.50. A rally above Friday's high of 15.11 should be considered a strong positive, after the weakness seen Friday morning. VLO this past week tested the previous 38-month intra-day low at 29.70 with a drop down to 31.23. On Friday, the stock was able to hold above that intra-day low and though it was not able to generate much of a rally, it was able to close in the green and give signs that the re-test may be successful. Nonetheless, on a daily closing basis, the stock did make a new 38-month daily closing low with a close at 31.44 which was below the previous low at 31.72. On Friday the stock was able to close above 31.72 thus perhaps giving a failure-to-follow-through signal. A close in the green on Monday will likely generate a strong rally in the stock. The 20-day MA has been giving the stock problems as it stayed just below that line all week. Nonetheless, if the stock is able to rally and close in the green on Monday a rally back up to that line at 35.00 is highly probable. Should the stock be successful in getting above the recent high at 36.30, a rally up to at least the 40.98 should occur. A close below 31.41 would be a negative and likely generate a drop down to the $29 level and a daily close at 30.33. FTEK dropped two weeks ago into a long-term area of strong intra-day support between 14.15 and 14.79 with a drop to 14.51. In so doing, though, the stock did make a new 19-month daily closing low at 15.40, below the previous low of 15.77. The stock was able to reverse that low close and has closed above 15.77 for the past 4 trading days. Nonetheless, the stock also broke below the lowest weekly closing low for the last 19 months at 16.57 and though it attempted to close above that level this past Friday was only able to close at that price. In other words, the weekly charts have not yet confirmed the stock is turning around. The 20-day MA is currently at 17.00 and the most recent high close was as 16.99. This means that a close above 17.00 any day this week will generate a buy signal that will likely be confirmed next Friday with a higher close and a reversal of the break of support. A close below 15.77 at this stage of the game would be a negative. PFE had a positive earnings report this past week and was able to gap up and break above the 50-day MA. No resistance is seen on the chart until the 100-day and 20-week MA's are reached up at 19.40. In addition to the MA's there is a minor high close at that same price as well, thus making that area a strong resistance. The stock did leave a gap open between 18.49 and 18.61 that is likely to get closed. Nonetheless, the area between 18.40 and 18.60 must be considered strong support, as that was an area with 3 major high daily closes. If the stock is able to get above Friday's high at 18.95 on Monday it seems likely the stock will run up to 19.40. Depending on whether the stock is able to close on or near the highs, I will make a decision whether to liquidate the stock or wait one day to see if it is able to generate a second gap up that would be seen as a runaway gap. Such a gap would be strongly bullish. For now, though, possible trading range for the week is 18.40 to 19.40. AMZN had a better-than-expected earnings report that when added to a very oversold condition helped generate almost a $20 move up in price over the past 2 weeks. Nonetheless, on the day after the report the stock rallied up to a very strong resistance level up at 82.40 and was unable to hold on to all of its gains and closed below the 200-day MA at 79.20, over $3 lower than the high of the day. On Friday, the stock attempted a rally but closed in the red and below the 50-week MA at 80.00. Though the report was bullish, the action on Thursday and Friday seems to be stating that the stock will have problems going higher. Support is decent down at 75.01 (76.15 on a daily closing basis) and strong down at 71.56 (72.11 on a daily closing basis). A gap was left open between 72.07 and 76.29 that will act as a magnet for the sellers. With the inability of the stock to close above the 200-day MA or the 50-week MA after a bullish earnings report, it is very likely the gap will be filled. A drop down to 75.01 should be seen this coming week. A daily close below 76.15 would be reason to think that 71.56 will be seen. A close below 71.56 would be strongly bearish and generate moves back down to the $63 level. LEH was unable to maintain the rally that was started the previous week from 12.02. On Friday the stock closed below the previous weekly close at 19.11 and is now back on the defensive trying to hold on to its previous lows. The stock did rally up to 22.05 but the 21.75 intra-week high from back in 1998 was successful in preventing any further rally. The stock on Friday did break below the most recent previous low at 17.10 and if it closes in the red on Monday, is likely heading down to at least the 15.16 level (support from back in 2000). If that level breaks, the stock will likely go down to 13.29 (previous intra-week low the previous week before the 12.02 low was made). Stops loss orders should now be lowered to 19.21 on a stop close only basis. If the stock is able to close above 19.11 any day this week, it is likely to be heading back up to the $22 level. Stock is in a downtrend in a bear market. The probabilities are strongly in favor of the bears. JBL attempted a breakout this week when the stock closed above the previous resistance level at 16.57 with a close at 16.65. The breakout did not generate any additional buying and the disappointment generated a drop of over $1 in the past two trading days. On a daily closing basis, there is major support in the stock is down between 14.90 and 15.00 (previous low daily and weekly close as well as the 50 and 200 day MA's). On a positive note, there are now 4 daily closes between 16.48 and 16.57. Such a conglomeration of closes (more than 2) is a magnet for traders and normally gets taken out. If the stock is able to close at least 20 points above 16.67 there is no resistance until 18.42. A weekly close above 16.00 would be a breakout above the 50-week MA and would be strongly positive. This is not a stock that will necessarily follow the indexes as it moves on its own fundamentals. GIGM had a lower weekly close this Friday than the previous one and that has now put the recent short-covering up-trend into question. The stock has been able to maintain itself above the 20-day MA for the last couple of day but if there is any additional weakness on Monday and the 20-day MA is broken, the possibilities of a drop back down to $11 increase exponentially. The biggest negative this week was the inability of the stock to punch through the recent resistance level at 13.45. That resistance level cannot be called anything more than just a decent resistance and yet the stock failed to break above that level even though the chart formation was bullish enough for it to do so. I have raised my stop loss to 12.07 but it is a mental stop loss. There is some support at 12.17 but it is minor. I am being extra sensitive on the stop loss, not because the stock is giving a sell signal but because it has failed to be as strong as it should have been. In addition, this is a stock that will likely be affected by a drop in the indexes. A rally and close above 13.45 would be bullish, though, and a rally up to the $15 would likely ensure shortly thereafter. CMED has rallied over the past 9 trading days since testing successfully the 200-day MA, as well as the 20 and 50 week MA's, all around $41. Nonetheless, this past week the stock did break above a previous resistance level of consequence at 45.92 (45.00 on a daily closing basis) and committed itself to testing and surpassing the 5-month high at 49.82. The buyers are now committed to breaking that level and if they fail, the disappointment will likely be high and the stock would likely break the recent low at 41.01 and perhaps even get down low enough to close an open gap at 34.80. On Friday the stock did attempt to close above a very important weekly close at 47.58 but even though the stock traded above that level for a portion of the day, in the end it was unable to close above it. Such a failure may generate further selling this week if the indexes get under pressure. Nonetheless, a lower close next Friday than this past Friday is needed before it can be said that this Friday's close was a successful re-test of the previous high close at 47.58. Keep in mind that at this time the bulls are committed and therefore will likely attempt further rallies in the first part of the week. Any daily close above 47.96 will be bullish while a daily close below 45.56 will be bearish.
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1) JBL - Purchased at 15.76. Stop loss lowered to 14.80. Stock closed on Friday at 15.72.
2) VLO - Purchased at 30.30. Stop loss at 28.70. Stock closed on Friday at 31.88.
3) JNPR - Purchased at 22.15. Averaged long at 21.85. Liquidated at 22.08. Profit on the trade of $64 per 100 shares (2 mentions) minus commissions.
4) ELON - Averaged long at 12.41. No stop loss at present. Stock closed on Friday at 13.57.
5) PFE - Purchased at 17.46. Stop loss raised to 17.79. Stock closed Friday at 18.89.
6) STP - Purchased at 36.04. Averaged long at 41.11 (3 mentions). No stop loss at present. Stock closed on Friday at 33.29.
7) VLO - Purchased at 34.13. Liquidated at 33.75. Loss on the trade of $38 per 100 shares plus commissions.
8) YGE - Averaged long at 19.156 (3 mentions). No stop loss at present. Stock closed on Friday at 14.93.
9) GIGM - Purchased at 12.83. Liquidated at 12.40. Loss on the trade of $43 per 100 shares minus commission.
10) GIGM - Purchased at 12.40. Stop loss raised to 12.07. Stock closed on Friday at 12.36.
11) NUAN - Liquidated at 16.83. Purchased at 14.15. Profit on the trade of $268 per 100 shares minus commissions.
12) FTEK - Purchased at 16.87. Stop loss now at 15.30 on a stop close only basis. Stock closed on Friday at 16.50.
13) ITG - Liquidated at 30.23. Averaged long at 28.10. Profit on the trade of $426 per 100 shares (2 mentions) minus commissions.
14) IR - Purchased at 35.81. Stop loss now at 35.32. Stock closed on Friday at 36.30.
15) RIO - Purchased at 29.69. Liquidated at 28.42. Loss on the trade of $127 per 100 shares plus commissions.
16) LEH - Shorted at 21.70. Stop loss lowered to 19.21 stop close only. Stock closed on Friday at 17.05.
17) CMED - Shorted at 48.00. Stop loss at 48.91. Stock closed on Friday at 46.85.
18) AMZN - Shorted at 80.00 and again at 80.28. Averaged short at 81.13. Stop loss at 82.39 on a stop close only basis. Stock closed on Friday at 78.31.
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Encyclopedia of Chart Patterns. A must have for chart aficionados! |
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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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