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Issue #186 
August 01, 2010 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Indexes at Pivotal Levels. Direction Likely Decided this Week!
DOW Friday closing price - 10465
The DOW attempted throughout the week to break above an important previous high resistance level at 10594 (got up to 10577 and 10585) but was unable to do so. Nonetheless, the index was still able to close above last week's close at 10425 as well as close slightly above an important weekly close resistance at 10451. As such, it can be said the recent upside trend is intact but that no decisive action was established this past week.
The news in general continued to be positive but some of the economic reports did not show that the economy is progressing upward at a rate that would generate further upside. In addition, the volume continues to indicate that traders are not aggressively buying at these levels.
On a weekly closing basis, resistance is decent to strong at 10451. Above that level, resistance is decent at 10618 and strong at 11204. On a daily closing basis, resistance is decent to strong at 10538, and decent to strong again at 10725. Above that level, there is minor to decent resistance at 10897 and strong resistance between 11000 and 110205. On a weekly closing basis, support is minor at 10098, minor to decent at 10012 and at 9932 and decent at 9686. On a daily closing basis, support is minor to decent at the 200-day MA, currently at 10410, and then minor between 10286 and 10310. Below that level there is decent support at 10098, minor to decent at 9816 and strong at 9686.
The DOW has now been trading above the 200-day MA for 6 trading days. Nonetheless, back in June the index also broke above the 200-day MA for a period of 5 trading days before "giving up the ship". In addition, the index did get up to the 100-day MA, currently at 10530, and now shows a successful retest of that line as well. With both of these MA's now close to each other, if is strongly likely that some determination will be made this week as just "normal" trading would suggest that the index will breakout or breakdown from this 100 points trading range between the two.
The ISM Index report will be out Monday morning at 10:00am and there is a strong possibility that report will be the catalyst for the week. A daily close above the 100-day MA, as well as above the high daily close for the week at 10538, will likely bring in strong technical buying as the entire period of weakness seen from May to July would be erased, giving fuel to the bulls as well as thrusting the stock at least up into the 10725 level and perhaps as high as 11000. By the same token, any close below the 200-day MA, will likely suggest that further upside is not forthcoming and cause the index to go back down and at least test the psychological support at 10,000 if not go down to the recent lows at 9614. It is evident that this coming week is very important. With the ISM Index being such an important fundamental report, it would be surprising if the index does not decide a direction as early as 10:00am Monday morning.
It must also be mentioned that the inverted Head & Shoulders formation whose neckline was broken 6 trading days ago when the index closed above 10363, would be negated if the DOW closes below that level again. Having gone down on Friday to 10348, negation of the formation is within a one day's drop. Such a failure-to-follow-through would likely be taken as a strong technical negative and generate strong selling.
It must also be mentioned that the DOW on Thursday had a classic reversal day (higher highs, lower lows, and a close below the previous day's low) in addition to generating a double top on the intra-week chart with a previous high at 10594 and a high last week of 10585. The probabilities thus favors the downside this coming week leaving the bulls needing a positive ISM Index report to "save the day". Any daily close above 10538 or below 10363 would likely generate strong follow through in that direction.
NASDAQ Friday closing price - 2255
The NASDAQ was unable to get above a previous and decent intra-week resistance level at 2307 (had a high of 2307) and closed below the previous week's close, as well as below the 200-day MA, giving notice that further upside will likely require even more fundamental help than was seen this previous week.
It must also be mentioned that unlike the NASDAQ closed substantially below the previous June 14th weekly close at 2310, unlike the DOW that was able to generate a close on Friday just slightly above the same June 14th resistance level. Having been the leader to the upside during the past 16 months, the loss of leadership suggests that investors are going back to the safety of blue chip stocks and may now be totally convinced that the overall mid-term bull trend seen last year is over.
On a weekly closing basis, resistance is minor at 2269 and decent to strong resistance between 2310 and 2317. Above that level, resistance is minor at 2347, decent at 2453, and major at 2530. On a daily closing basis, there is minor resistance at 2278, decent resistance at 2296, decent again at 2303, and strong at 2310. Above that level, there is decent to strong resistance at 2320 and then nothing of consequence until 2425. On a weekly closing basis, support is decent between 2219 and 2229, minor at 2179, and decent to strong at 2141. On a daily closing basis, support is minor at 2222 and decent to strong between 2179 and 2196. Below that level, there is minor to decent support at 2159 and strong support at 2092.
The NASDAQ closed on Friday just slightly above a previously important daily close resistance at 2250. The 2250 level is presently considered the neckline that was broken last week of the possible inverted Head & Shoulders formation on the daily chart. With the index closing at 2255 on Friday, Monday is suddenly thrust into an important position of a red or green close being highly indicative. A close below that level would not only give a failure-to-follow-through signal but put the lows of the week at 2219 (200-week MA) at risk of being tested and likely broken, if seen again. A weekly closing break of the 200-week MA next week would likely be a "nail-in-the-coffin" for the bulls as another break of that major support level would likely cause the bears to sell aggressively.
It is important to note that the NASDAQ continues to show the index in a downtrend on the weekly closing chart, with lower highs and lower lows. Chart-wise the bears are still in control. By the same token, last week's close at 2269 now gives the bulls the close-by opportunity that if they can generate some strength this coming week and close next Friday just 14 points higher than this past week's close and above that level, that trend might change.
Nonetheless, waiting until next Friday to decide the fate of the index is probably too long to wait, and therefore the 200-day MA, currently at 2263 as well as the daily close pivot point at 2250 seem to be what the traders will be concentrating on, on Monday. It is likely that a close below 2250 on Monday will put the bulls on the defensive and trying to defend the 2200-2222 level, whereas a close on Monday above the 200-day MA at 2263 will likely put the bears on the defensive trying to prevent the index from going above last week's high at 2307. All of this likely to be decided by the traders evaluation of what the ISM reports says on Monday.
SPX Friday closing price - 1102
The SPX was unable to make up its mind, closing at the same level as the previous week and likely leaving the decisions to what the economic reports have to say this coming week. The index did generate an intra-week rally up to 1121 and test the most recent intra-week high at 1131, leaving the index still in a bearish trend with lower highs and lower lows for the last 2 months. In addition, the index did successfully test the previous daily closing high at 1118 with a close on Tuesday at 1115, and in the process also test successfully the 200-day MA, currently at 1115 as well.
It has to be noted that the SPX continues to under-perform the other indexes inasmuch as the 200-day MA continues to be unbroken, whereas the other indexes have all been successful recently in closing above that line. With all the earnings reports on the big financial companies out of the way, the index is now likely dependant to the upside on what the market in general does, rather than on financial issues themselves. With financial companies still on a general bearish fundamental basis, the probabilities continue to favor the downside.
On a weekly closing basis, resistance is strong at 1118. Above that level, decent to strong resistance is found at 1145, and major at 1217. On a daily closing basis, resistance is strong at 1115 and a bit stronger at 1118. Above that level, resistance is minor to decent at the 100-day MA, currently at 1129, and decent to strong at 1150. On a weekly closing basis, decent (perhaps even decent to strong) support is found at 1065/1066 and strong support at 1023. Below that level there is decent support at 1014 (100-week MA) and decent to strong at 1000 (psychological support). On a daily closing basis, support is decent to strong between 1065 and 1070, decent at 1050 and strong at 1023.
The SPX now shows a successful retest of the 200-day MA, currently at 1115 as well as of the previous and strong daily close resistance at 1118. Both of these events continue to leave the index in a bearish chart pattern. Nonetheless, the index did fall back to close slightly above what is an important pivot point at 1100, putting the index in an uneventful position and likely leaving the short-term direction to whatever happens on Monday after the ISM Index report comes out. Evidently a close below 1100 will likely generate further selling with a primary objective of 1066 or even perhaps down to 1041. By the same token, if the report is positive, rallies up to the 200-day MA are likely to be seen, and if broken, a rally up to 1150 or even up to 1200 could be seen.
With all the positive earnings reports on financial institutions that have come out over the last 2 weeks, the fact that the SPX continues to under-perform the other indexes, as well as hold all resistance levels, has to be considered a strong negative. A break above last week's high at 1121 or below last week's low at 1088 will likely signal the next short-term term.
Last week's economic and earnings reports failed to deliver a definitive direction to the indexes. Nonetheless, what was accomplished is "setting up the chart" with formations that will clearly signal the direction for the next few weeks and/or months, based on what the economic reports say this coming week.
The earnings reports have continued to come out mostly positive but the impact of that seems to be wearing off as it now seems to be "expected". Nonetheless, this coming week several important economic reports are due out, starting with the ISM index on Monday and the Unemployment Report on Friday. The GDP-Adv report that came out on Friday was negative but much of that was shrugged aside when the Chicago Manufacturing report came out better than expected. Nonetheless, GDP set the stage for a weakened economy outlook and if that is confirmed on Monday with the ISM Index, it could be all she wrote.
The fact that none of the indexes have been able to confirm the recent up-trend as successful (by breaking above important resistance levels) suggests the probabilities favor the downside from this point on. By the same token, with earnings being generally better than anticipated, the big question being asked is whether companies are going to start hiring again or whether the profits have just come from cost-cutting measures. Such a distinction seems to be the crux of the matter in the minds of the traders at this time. The ISM index and the Unemployment numbers this week are likely to confirm that one way or another. This is probably a very important pivotal week.
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Stock Analysis/Evaluation
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CHART Outlooks
Everything is set up for a resolution this week of the direction of the market for the next couple of months. There are 2 major reports this week with the ISM index on Monday and the Unemployment report on Friday. Probabilities seem to favor some resolution as early as Monday morning.
The probabilities continue to favor the downside as many of the recent economic reports have been leaning toward the bearish side. Nonetheless, with continued good earnings reports, the market is set for a move in either direction depending on the status of the reports.
This week there will be 1 buy mention and 2 Honorable buy mentions as well 3 sell mentions this week but all mentions will be dependant on the direction the market takes Monday morning after the ISM report comes out. As such, the sell mentions will be Null and Void if the indexes are moving up as well as the purchases will be Null and Void if the indexes are moving down. Resolution of the direction will be mentioned on the board.
SALES
MMM - Friday closing price - 85.54
MMM successfully tested the previous high weekly close at 88.67 with a close the previous week at 86.17 and a red close on Friday. This is now the second successful retest of the all-time high weekly close made on Oct07 at 93.47 and suggests that the stock will now be heading back down to do some form of retest of the 10-year low at 41.83 seen in March of last year.
MMM shows a "picture perfect" chart formation in which the highs seen in 2004 have been duplicated almost to perfection this year and it is evident that if the stock market is heading lower that the stock could easily lead the way down.
On a weekly closing basis, resistance is minor to decent at 86.17 and strong at 88.67. On a daily closing basis, resistance is minor at 86.44, decent to strong at 87.32, and major at 89.81. On a weekly closing basis, support is very minor at 82.63 and minor at 80.95. Below that there is minor to decent support at 78.54 and again at 77.67, and strong support is at 76.10. On a daily closing basis, there is minor psychological support at 85.00, and then decent support at 82.63. Below that there is decent support at 82.63 that includes the 200-day MA. Decent support is found at 77.67 and major at 74.74.
In 2004 MMM saw a major intra-week high of 90.29 and in 2005 a high of 87.48. These two highs were duplicated this past year with a high in May at 90.52 and a high last week at 87.48. In 2004 and 2005, both highs were subsequently followed by a $17 move down. This year, the recent high at 90.52 was followed by a $21 move down. It must also be mentioned that MMM saw a huge drop in price come in 2009 when the stock dropped all the way down to 40.87 and the subsequent $50 rally back up to 90.52 has not shown any kind of a retest of the lows other than the recent drop down to 68.96.
MMM had a reversal week this week generating a new 12-week high and closing in the red. If there is any follow through this week (likely) there is no support on the weekly chart until the $80 level is reached. Drops back down to the 200-week MA, currently at 74.75 are likely to be seen if the stock starts heading lower. Drops back down to the recent low at 68.96 as well as down to the 100-week MA, currently at 69.25 could easily be seen if the indexes start heading back down to their recent lows.
Based on the fact that MMM also saw equal important highs back in 2004 as was seen this past week at 87.48, it is unlikely those levels will be broken unless the indexes are heading higher. As such, the trade offers a very good risk/reward ratio as well as a high probability rating.
Sales of MMM between 85.50 and 85.84 and using a stop loss at 87.58 and having an objective of 74.75 offers a risk/reward ratio of 5-1.
My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the highest).
BA Friday closing price - 68.14
BA broke above the 200-week MA back in March and broke below the line again in May and since then has been unable to get above the line in spite of the recent rally in the indexes. In addition, the stock shows an inverted flag formation on the weekly chart with the flagpole being the drop from 76.00 down to 59.84 and the flag being the trading range for the past 11 weeks between 59.84 and $69.34.
BA attempted to break out of the flag as well as the 200-week MA, currently at 69.50 with a rally up to 69.75 this past week. Nonetheless, the rally failed to accomplish any follow through and the stock closed back below the two most recent high weekly closes at 68.77 and 69.82, suggesting that further upside will be compromised unless the indexes generate a rally.
On a weekly closing basis, resistance is decent at 68.77 and again at 69.82. Above that level resistance is decent to 72.99 and major at 75.13. On a daily closing basis, resistance is strong at 68.77/68.85. Above that level resistance is minor at 70.07, decent at 72.77 and strong between 74.39 and 75.59. On a weekly closing basis, support is decent at 61.90 and decent to strong at 61.15. Below that level, there is only psychological support at 60.00 and then nothing until the 100-week MA, currently at 51.90. On a daily closing basis, there is minor support at 67.22 and again minor at 66.28. Below that there is no support until the 200-day MA is reached, currently down at 62.25. Further decent supports are found at 61.90, at 61.36 and at 60.11.
BA has recently been in the news with positive fundamentals that have generated a rally from 59.86 to 69.75. Nonetheless, those fundamentals have now been factored in totally and further good news is not anticipated to happen. The stock has moved up over the past 16-months from a low of 29.05 to April's high at 76.00 and now the stock seems to be slipping and possibly on its way to test the 100-week MA, currently at $51 as well as the strong psychological support at $50.
BA shows a recent double top on the daily chart at 69.75 that has now been confirmed and if the indexes start heading down from here, it is highly unlikely the stock will be able to move higher. In addition, the inverted flag formation does project a drop down to the $53-$54 level should the recent low at 59.86 get broken. If nothing else, the stock seems to be at least in a trading range between $60 and $70 and drops back down to the bottom of that trading range are likely to be seen if the indexes are unable to rally from here.
Sales of BA at Friday's closing price of 68.14 and using a stop loss at 69.85 and having a minimum objective of 60.00, offers a 4-1 risk/reward ratio.
My rating on the trade is a 3.5 (on a scale of 1-5 with 5 being the most probable).
OSK Friday closing price - 34.38
OSK has been in a very well defined downtrend since the April high at 44.57 and in the process the stock broke below the 200-week MA 11 weeks ago and in spite of the recent rally in the indexes has been unable to get above the line since. In addition, the stock now shows 2 previous lower weekly highs as well as 2 lower weekly lows and that is considered a confirmed downtrend.
After OSK found decent psychological support at $30 5-weeks ago, the stock has managed to generate a a rally during these past couple of weeks that is now once again nearing the 200-week MA, currently at 35.40. Nonetheless, unless the indexes are able to generate further upside from here, the probabilities of the stock failing at this level are high.
On a weekly closing basis, resistance is decent at 35.26, minor to decent at 38.34, and decent again at 41.82. Major resistance is found at 43.62. On a daily closing basis, resistance is strong between 35.00 and 35.52, decent at 36.12 and decent to strong at 37.10. On a weekly closing basis, support is minor at 31.02 and strong at 30.00. Below that, there is minor to decent support at 28.68 and then absolutely nothing until the 100-week MA, currently at 23.85, is reached. On a daily closing basis, support is very minor at 33.75, minor at 33.20, and minor to decent at 32.36. Below that, there is decent support at 30.66 and strong at 30.00.
OSK had the 100-week MA cross below the 200-day MA 7 trading days ago and on Friday closed just $1 away from the 200-week MA, currently at 35.40. In addition, the stock shows 2 previous weekly closing lows as well as 1 weekly closing high between 34.18 and 35.37 that makes the $35 level into a very strong resistance levels that is unlikely to get broken unless the indexes are heading higher.
OSK does show good support, both psychologically as well as a major previous weekly low close at $30, but the stock is in a well-defined downtrend that is showing additional strength due to the fact that since the 30-month high at 44.57 has been made the rallies have all been weak. As such, if the indexes are heading lower, the $30 support level has a high probability of breaking and without much support of consequence until the low $20's are reached, offers a very good risk/reward ratio trade as well as high probabilities of success.
During the period from May 24th to June 21st, OSK was unable to get above the 36.50 level, though the stock tried to do so on 3 of the 4 weeks involved. In addition, both the 100 and 200 day MA's, are currently at that price. As such, it is evident the resistance level is clearly defined on any short trades.
Sales of OSK between Friday's closing price of 34.38 and up to 35.25 and using a stop loss at 36.60 and having an objective of 23.40, offers a risk/reward ratio of 6-1.
My rating on the trade is a 4 (on a scale of 1-5 with 5 being the highest).
PURCHASES
RHT Friday closing price - 32.15
RHT has been on a rally of great consequence since the stock made a 6-year low in November at 7.50. The stock just last week made a new 10-year high, breaking above the previous high seen in May06 at 32.48, and shows no resistance until very minor resistance is found at 36.00. The all-time high was seen back in 1999 at $150 and therefore the stock has tremendous potential to the upside if the rally continues.
RHT has a previous daily closing high at 31.92/32.13 and a previous weekly closing high at 31.92. Friday's close was at 32.10 and if the stock is to continue higher, Friday's close will be considered a successful retest of the breakout level, likely generating further upside of consequence.
On a weekly closing basis, there is minor resistance at 59.88 but is it from 1999. On a daily closing basis, there is minor resistance at 33.22. On a weekly closing basis, support is minor at 31.92 and then nothing until 28.91, On a daily closing basis, there is minor support at 31.80 and then again at 31.58.
RHT is on what could be a major 10-year breakout that shows no previous weekly close resistance of consequence for at least another $27 higher and that resistance is minor and over 10-years old, which likely means "no resistance". There is a previous intra-week high from 2001 at 36.00 that could slow the stock down a bit, but the stock has now retested the previous breakout level at 32.00 on both the daily and weekly chart, which suggests that unless the stock market is heading lower that there is nothing but open air above.
RHT has built a very strong support base between $27 and $32 for the last 9 months from which a rally of consequence can be launched. During this period of time the stock has suffered through a strong drop down in the indexes (DOW over 1500 points) without suffering and breakdown and that gives the bulls a good reason to think the stock could go higher even if the indexes don't. In simple words, this is a stock that might not be affected negatively if the indexes go lower.
It is evident that with the breakout, the stock should not close below any of the recent support levels established and that gives the trade a clearly defined stop loss level as well as unlimited profit potential.
Purchases of RHT between Friday's closing price of 32.10 and down to 31.87 and using a stop loss at 30.96 and having a minimum objective of 36.00 (probably much more), offers a 4-1 risk/reward ratio.
My rating on the trade is a 3.5 (on a scale of 1-5 with 5 being the highest).
Honorable mentions for:
DD is only to be purchased if the stock is able to get above the most recent intra-week high at 41.45. If that happens the probabilities show that a rally up to $48 would likely occur. The stop loss would be placed at 39.65, giving the trade a 4-1 risk/reward ratio. Stock is only to be played to the upside if it breaks out and the indexes are heading higher.
COO shows multiple tops on the weekly closing chart between 40.07 and 41.57 as well as a very strong support at the recent low at 37.43 where the 100-week MA is currently located as well. The recent intra-week high is at 41.81 and if broken there is no resistance of consequence until $50 is reached. As such, if the indexes are heading higher, the stock could be purchased between Friday's closing price of 38.86 and up to 39.20, using a stop loss at 37.33 and an objective of $50. Such a trade would offer at least a 5-1 risk/reward ratio.
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Updates
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| Monthly & Yearly Portfolio Results
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Closed Trades, Open Positions and Stop Loss Changes
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Status of account for 2007: Profit of $9,758 per 100 shares after losses and commissions were subtracted. Status of account for 2010, as of 6/31 Profit of $20842 using 100 shares per mention (after commissions & losses) Closed out profitable trades for July per 100 shares per mention (after commission)
MRK (short) $109 AMZN (short) $93 DD (short) $84 AMZN (long) $99 Closed positions with increase in equity above last months close. KO (long) $181 Total Profit for July, per 100 shares and after commissions $566 Closed out losing trades for July per 100 shares of each mention (including commission)
SOHU (short) $109
AMZN (short) $79 AMZN (short) $213 IR (short) $751 AMZN (short) $131 AMZN (short) $122 SOHU (short) $26 AMZN (short) $96 IR (short) $31 AMZN (short) $72 SOHU (short) $90 AMZN (short) $68 AMZN (short) $157 Closed positions with decrease in equity below last months close.
SOHU (short) $467 Total Loss for July, per 100 shares, including commissions $2412 Open positions in profit per 100 shares per mention as of 7/30
ORCL (short) $30 SNDA (short) $58 IR (short) $59 DDM (short) $15 DCTH (long) $60 Open positions with increase in equity above last months close. DCTH (long) $146 Total $368 Open positions in loss per 100 shares per mention as of 7/30
AXP (short) $679
HPQ (short) $74 DD (short) $1063 MCD (short) $14 AIG (short) $195 AMZN (short) $2 Open positions with decrease in equity below last months close. NONE $0 Total $2027 Status of trades for month of July per 100 shares on each mention after losses and commission subtractions.
Loss of $3505
Status of account/portfolio for 2010, as of 7/30Profit of $17337 using 100 shares traded per mention.
NUAN had a reversal week with new 5-week highs but a red weekly close on Friday that suggests that further upside is unlikely to be seen unless the indexes break out. Drops back down to the $15 support level are now once again likely. On a short-term basis, resistance is at 17.00 and support at 16.00 and until the market decides which way it wants to go, the stock is likely to trade in that area. Any break above 17.25 or below 15.68 will likely generate further movement in that direction. Probabilities favor the downside.
DCTH made a new 5-week high with a rally up to 9.16 but ended up testing the 200-day MA, currently at 7.50, as well as closing near the lows of the week. On a positive note, the stock maintains its upward momentum on the weekly chart as the close 9 points below last week's close was not sufficient to state that a temporary high has been found. It is possible and perhaps even likely that the stock will get back down and even close at 7.50 one day this week. Nonetheless, the probabilities of the stock rallying at least back up to the 8.76 level this coming week are also high. A daily close below 7.19 would be a negative while a close above 8.69 a positive. AXP had a reversal week making a new 12-week high but closing in the red. Last week's close above the 200-week MA was confirmed though, and suggests that further upside may happen in the near future. Nonetheless, with the red close on Friday a retest of the 200-week MA, currently at 42.40 is highly likely to be seen this coming week. A weekly close below 41.38 would give a strong failure-to-follow-through signal and a likely drop down to at least $40. A daily close above 45.43 would be a positive and likely generate a retest of the 2-year high at 49.19. Probabilities favor a drop this week back down to 42.40, but past that it will probably all depend on what the indexes decide to do. DD received a much better than expected earnings report that caused the stock to gap up, close above the 200-week MA, as well as generate a new 22-month weekly closing high above the previous high at 40.22. Nonetheless, the stock was unable to get above the previous 22-month intra-week high at 41.45 and seems to be waiting to see what the indexes decide to do before making up its own mind. The weekly close was not sufficiently above the previous weekly close as to positively state that the level has been broken. In fact, if the stock closes lower next Friday, especially if it closes below 40.22, this past week's close will be seen as a double top. By the same token, based on the positive earnings report the probabilities now favor further upside, which is likely to happen unless the indexes head "substantially" lower. There is an open gap between 38.99 and 39.79 that might end up being a breakaway gap if followed by another gap opening. A break above this past week's high at 41.14, as well as above the previous high at 41.45, would likely generate a rally up to the $48 level. Nonetheless, if the open gap is closed, there will be strong disappointment and a drop down to $37 would likely ensue. Probabilities seem to favor the upside at this time. HPQ continues in a weekly chart downtrend having made 2 lower highs during that period of time and in a position to generate a third lower weekly high if the stock goes below last week's low at 45.71. Having closed near the lows of the week at 46.04, the probabilities of that happening are high. In addition, the stock generated a red weekly close on Friday suggesting that the previous week's close at 46.20 was in fact a successful test of a previous weekly low close of some consequence at 46.01. Nonetheless, like with many other stocks, it is likely that it will move based on what the indexes do. Decent to strong daily close support is found between 45.24 and 45.58 while strong daily close resistance is found at 47.57. A close above or below either of those 2 levels will likely generate follow through of some consequence. Weekly chart continues to be in a downtrend, so the probabilities favor further downside. IR continues to be in a short-term weekly uptrend closing higher this week than last week. Nonetheless, the stock stayed close enough to a very strong weekly close resistance at 37.33 (closed at 37.46) that suggests the resistance level has not been broken in a convincing way. On the positive side, the stock confirmed the upside break of the 200-week MA, currently at 36.00, with a second close above the line. Drops down to test the line are highly likely even within the context of further upside. Nonetheless, any weekly close below the line could generate a failure-to-follow-through signal. A daily close above 38.11 would be considered a positive. At present time, probabilities slightly favor the upside. MCD once again, for the 3rd week in a row, closed just slightly below the $70 level without giving any clear notice of the direction the stock will take from this moment on. Like with so many other stocks, the direction will likely be decided by whatever the indexes do. Nonetheless, by staying not only below the previous all-time weekly high close at 71.15 but also for 3 weeks in a row below $70, the probabilities favor the downside. It is important to note, though, that on Thursday the stock did generate an "indicative" daily close below 70.00 when it closed at 69.38. Such action suggests the probabilities favor the downside. Any daily close now below 69.38 would be considered a negative, while a close above the recent high daily close at 70.87 would likely be considered a positive. ORCL had a reversal week making an 11-week high and closing in the red. Part of the reason for the reversal was a lawsuit the government brought upon the company alleging fraud in a contract they had with the government. The red close on Friday generated a successful retest on the weekly chart of the previous 9-year high weekly close at 26.48 and set the stock up for at least a re-test of the low weekly close at 21.83, if not continuation of the recent downtrend if the indexes start heading lower. Decent weekly close support is found down at 23.00 and again at 22.13. On the daily chart, the stock closed below the 200-day MA, currently at 23.75, and shows no support below until the 50-day MA, currently at 22.90. Stock is likely to be under selling pressure because of the lawsuit even if the indexes don't head lower, but if they do, the probabilities are high that a new 8-month low will be made with a possible objective of $20. SNDA continued to trade around the decent resistance level at $40 level without being able to close above it. The downtrend in place since June of last year continues to be in place and no sign that it has found a bottom has been seen. Support is minor to decent at the recent weekly closing low at 37.61 but it is not a support that is likely to hold unless there is fundamental help. Below that level there is no support whatsoever on the weekly chart until the 200-week MA, currently at 34.90 is reached. On the daily chart, the stock shows strong daily close resistance between 40.33 and 40.37 that is unlikely to get broken unless some positive fundamental news comes out. Nonetheless, on the daily chart support is decent at 38.44 as well. With the inability of the stock to get above the $40 level, probabilities continue to favor further downside. AIG has been in a downtrend since August of last year. Nonetheless, the stock has been in a recent short-term uptrend that has taken the stock back up to a decent to strong resistance level at $40. There is an open gap between 40.51 and 40.11 that has been a magnet to the traders but after 3 days in a row this past week of the stock getting up intra-day to $40, the gap remains unclosed. On a daily closing basis, the stock shows a decent resistance at 39.28 that can now be stated has been tested successfully with a close on Tuesday at 39.15, followed by 3 lower daily closes since then. The closest support is minor to decent down at 36.75 and below that there is another minor do decent support at 35.41 and then nothing until decent support at the 200-day MA, currently at 33.60. The stock has been trading sideways for the past 2 months between $32 and $40, but it continues to be in a weekly downtrend. It is now likely that with the successful retest of the $40 level that the stock will be heading lower unless the indexes rally. The gap up at 40.51, though, continues to be magnet at this time and still likely to be closed. AMZN had an inside week (lower highs and higher lows) than last week but managed to generate a red weekly close on Friday giving notice that the rally seen the previous week might have run its course to the upside. The red close also generated a successful retest of the 50-week MA, which was currently at the high close last week at 118.90 (stock closed at 118.87). On a weekly closing basis, though, the stock has not yet given another sell signal after the rally from the $106 level. Weekly close support is decent at 117.52. On the daily closing chart, the stock shows strong support at 115.96 as well as minor support at this week's daily closing low at 116.86. A close below 115.96 will be a second sell signal likely generating a drop down to retest the recent and lowest close in 10 months at 108.61. Traders are likely waiting to see what the indexes do this week. A daily close above 118.87 will likely cause the stock to rally back up to at least the $120 area, with a slight possibility of heading up to 125.68. Probabilities favor the downside.
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1) DCTH - Averaged long at 6.555 (2 mentions). No stop loss at present. Stock closed on Friday at 7.80.
2) AMZN - Shorted at 117.20. Covered shorts at 117.78. Loss on the trade of $58 per 100 shares minus commissions.
3) HPQ - Shorted at 45.30. No stop loss at present. Stock closed on Friday at 46.04.
4) ORCL - Averaged short at 23.79 (2 mentions). Stop loss lowered to 24.29. Stock closed on Friday at 23.64.
5) DD - Averaged short at 35.325 (2 mentions). Stop loss now at 41.55. Stock closed on Friday at 40.67.
6) MRK - Covered shorts atg 34.87. Averaged short at 35.52. Profit on the trade of $130 per 100 shares (2 mentions) minus commissions.
7) SOHU - Shorted at 43.30. Covered shorts at 43.42. Loss on the trade of $12 per 100 shares plus commissions.
8) AXP - Averaged short at 41.255 (2 mentions). No stop loss at present. Stock closed on Friday at 44.64.
9) IR - Covered shorts at 38.05. Averaged short at 34.40. Loss on the trade of $730 per 100 shares (2 mentions) plus commissions.
10) AMZN - Shorted at 117.17, Covered short at 118.60. Loss on the trade of $143 per 100 shares plus commissions.
11) SNDA - Shorted at 40.49. Stop loss at 41.28. Stock closed on Friday at 39.91.
12) MCD - Shorted at 69.59. No stop loss at present. Stock closed on Friday at 69.73.
13) AMZN - Shorted at 117.87. Stop loss at 118.97. Stock closed on friday at 117.89.
14) AIG - Shorted at 39.19. Averaged short at 37.53 (2 mentions). No stop loss at present. Stock closed on Friday at 38.47.
15) AMZN - Purchased at 115.62. Liquidated at 116.75. Profit on the trade of $113 per 100 shares minus commissions.
16) DDM - Shorted at 44.23. Stop loss at 45.47. Index closed on Friday at 44.08.
17) DD - Shorted at 41.07. Covered short at 40.10. Profit on the trade of $97 per 100 shares minus commissions.
18) SOHU - Shorted at 47.80. Covered shorts at 48.34. Loss on the trade of $54 per 100 shares plus commissions.
19) IR - Shorted at 37.88. Covered shorts at 38.05. Loss on the trade of $17 per 100 shares plus commissions.
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The opinions and commentaries by Mr. De Vito are not a recommendation to buy or sell, but rather
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