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Issue #189 
August 22, 2010 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Support Broken, Further Downside Expected!
DOW Friday closing price - 10213
The DOW confirmed the failure-to-follow-through signal given last week with another red close and a break below the 50-week MA on Friday. In addition, the index also gave a sell signal on the daily chart closing below Monday's important daily low close at 10302. The index now shows a high probability of retesting the 10,000 level this coming week.
The DOW had a 353 point trading range this past week and based on the fact the 10300 level will now likely be decent resistance, projects the index to drop down to the mid 9900's level this coming week. Psychological support should be expected at 10,000 but unless positive fundamental news comes out, drops down to that level are now highly likely.
On a weekly closing basis, resistance is decent at 10451 and then nothing until decent to strong resistance is found between 10618 and 10654. On a daily closing basis, resistance is minor at 10362, decent at 10406 and again decent at 10451. Minor to decent resistance is found at 10538 and strong at 10699. On a weekly closing basis, support is very minor at 10098, decent between 10012 and 9932, and strong at 9688. On a daily closing basis, minor to decent support is found at 10098, and decent at 9974. Below that level there is minor to decent support 9816 and strong at 9686.
Economic news this past week was all negative, but the bulls were able to maintain some semblance of support based on the buying generally seen at the end of options expiration week. Nonetheless, that event has now passed and the economic calendar shows no news due out until Wednesday. As such, the probabilities of selling pressure continuing, at least for the first 2 days of the week, are high. In addition, the DOW now finds itself back into a general trading range channel seen at even levels (such as 10,000) that is 300 points above and below the even number (9700 to 10300). Having closed below the 10300 level on Friday, the probabilities have now increased that the index will be trading down to the bottom of that channel (9700) over the next couple of weeks.
On an intra-week basis, the DOW shows no support until 10008 is reached. Nonetheless, if the index goes below 10008 the closest intra-week support is down at 9870. On a weekly closing basis there is some minor support at 10080 and decent support at 10012 and again at 9932. The probabilities favor the index closing next Friday somewhere between 9932 and 10012.
As far as resistance is concerned, the 10300/10310 level will now be considered strong resistance. The top of the likely channel to be seen over the next few weeks is at 10300 and the 50-week MA is at 10310, giving that area added strength. Having tested repeatedly the 200-day MA, currently at 10450, this past week, and failing to close above it, it is unlikely the index will test that area again, at least not for now.
The big economic number this coming week will be the GDP revision due out on Friday. The number is expected to be lower (1.4% versus last months 2.4%). Nonetheless, there are concerns the number may even come out negative. As such, it is unlikely that any rallies of consequence could occur until that report comes out. The Durable Goods report is due out Wednesday as well as the weekly Initial Claims on Thursday. Both of these reports are "B" kinds of reports and they have been showing recent weakness. As such, they would literally have to come in much better than anticipated, to have any kind of a positive impact. On the other side of the coin, the Initial Claims now shows 2 weeks in a row worse than anticipated and if that trend continues, the market would likely take that as a very negative sign.
There seems to be little on the horizon right now to generate any new buying interest and with support levels of consequence having been broken this past week, the probabilities of further weakness being seen are high. The bulls are now in a defensive posture and its more about how much downside will be seen than it is about whether it will be seen.
NASDAQ Friday closing price - 2180
The NASDAQ confirmed last week's break of the very important 200-week MA, currently at 2220, with a second close in a row below the line. This is now the third time this has happened over the past 9 months and the third time is likely the "charm". Such action suggests that not only is last year's uptrend over, but that a downtrend has now begun.
The NASDAQ did outperform the other indexes this week as it was the only index to close above last week's close on Friday. Nonetheless, this is more likely suggestive that the traders keyed their selling on liquidating the recent blue chip purchases than on continuing to sell the overall market.
On a weekly closing basis, resistance is decent at 2220 and decent to strong at 2288. Above that level, decent to strong resistance is found between 2310 and 2317. On a daily closing basis, there is minor to decent resistance between 2216 and 2222, decent resistance between 2250 and 2265, and strong resistance at 2306. On a weekly closing basis, support is very minor at 2173, decent at 2141 and strong at 2092. Below that, there is decent psychological support at 2200 and strong support at the 100-week MA, currently at 1965. On a daily closing basis, support is minor to decent at 2173, minor to decent again at 2156, decent at 2126 and strong at 2092.
The NASDAQ has shown decent support between 2139 and 2164 over the past 14 weeks as 6 out of the 14 weeks had an intra-week low in that area. This past week's low was 2156, so it can be said that once again the support was upheld. By the same token, it should also be mentioned that on those 5 previous occasions the index was able to get substantially above the 200-week MA intra-wee, with the lowest previous weekly high on those weeks being 2144. This past week's high was 2129, and therefore simply stated, though the support held, the rally was weak.
The NASDAQ did close in the lower half of the weekly trading range and this suggests that further downside will be seen this coming week. Nonetheless, the lowest intra-week support in this area has been 2139 and that is still 41 points from Friday's close. This opens up the possibility that further weakness will be seen early in the week, but the break of support will not likely happen, if it happens at all, until Friday when the second revision of the GDP comes out. By the same token, it should be noted that if the index breaks below 2139, there is absolutely no support until 2100 is seen, as such the 2139 level must be considered an important pivot point this week.
To the upside, the area between 2200 and the 200-week MA at 2220 should be strong resistance and highly unlikely to get broken this coming week, unless one or more of the economic reports are highly positive. With the DOW showing strong resistance at 10300, the NASDAQ should show the same resistance at 2200.
Having confirmed the close below the 200-week MA for the third time in the last 9 months, suggests the index is now in a downtrend and therefore the probabilities strongly favor the bears at this time.
SPX Friday closing price - 1071
The SPX has been in a sideways trading range for most of the year with the 1100 area generally having been the pivot point during this year. The index has traded below the line a total of 45% of the time with a peak low of 90 points below 1100, and a total of 55% of the time above the line with a peak high of 120 points above 1100. As such, it must be noted that the 1100 area must be considered the most important indicator of short-term trend at this time.
The SPX, after having successfully tested the 100 and 200 day MA's, at 1115 and 1130 respectively, just 2 week ago, moved back below the 1100 pivot point this past week and after having tested the line on Tuesday and Wednesday, gave up the ship and it now heading lower.
On a weekly closing basis, resistance is minor at 1103 and strong between 1118 and 1122. On a daily closing basis, resistance is minor to decent at 1094, decent at 1095, and decent to strong at 1103. Above that level, there is strong resistance between 1115 and 1118, and strong to major at 1128. On a weekly closing basis, decent 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 at 1065/1066. Below that level, there is decent support at 1050 and strong at 1023.
Likely due to options expiration week, the SPX was able to hold itself above the decent weekly close support at 1065/1066 on Friday. By the same token, the index did successfully test the decent to strong pivot point and resistance at 1100 earlier in the week, putting the pressure on the index all week. The close in the lower half of the trading range for the week (1100 to 1064) suggests that further downside will be seen this coming week, especially since there are no economic reports due out until Wednesday. On an intra-week basis, support of consequence is not found until the 1041/1045 level is reached, and therefore it is safe to assume drops down to that price will likely be seen early in the week.
To the upside, the 1080 level has been a decent support/resistance level on many occasions since September of last year and with the index having tested successfully the 1100 level this past week, there seems to be no reason to go back to that level at this time. As such, 1080 is likely to be the high for this coming week. If that is the case, and considering last week's 36 point trading range, it would seem that 1041/1045 could be the low. By the same token, should the 1041 level get broken, drops down to the recent low at 1011 would be likely.
The SPX should continue to trade below the 1100 pivot point at this time as there are no fundamentals reasons for the index to show strength above that level right now. The question this week then, is whether support levels mentioned will hold or not. That certainly is likely to depend on what the second GDP estimate comes out on Friday.
The indexes showed no ability to rally this past week in spite of the general support that is found on option expiration week. The best the bulls could do this past week was defend support levels, and that support is slowly being eroded with the continuing negative economic reports. If that trend continues, it won't be long before the support breaks and a strong down move will occur.
There are no economic reports of consequence due out until Wednesday when Durable Goods comes out. Thursday could also be critical as the Initial Claims have come out worse than expected the past 2 weeks, and if that trend continues this coming week, it could be a negative catalyst for the downside. The big report this week, though, comes out on Friday with the second estimate on GDP. The report is already due to come out lower than the previous one (1.4% vs 2.4%) but there is concern the report could actually come out negative. If that happens, the flood gates to the downside will likely open.
Technically speaking the indexes are all under chart selling pressure and at levels where the bears have the upper hand. As such, the burden of proof is squarely on the shoulders of the bulls. Further downside is expected to be seen this coming week.
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Stock Analysis/Evaluation
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CHART Outlooks
Based on the sell signals given this past week in the indexes, only short positions should be considered at this time. Nonetheless, finding stocks that offer good risk/reward ratios has been difficult.
This week there are 2 sell mentions and 2 buy mentions. The Buy mentions are in stocks that are close to major support levels and have shown an ability to resist general market selling pressure. The sell mentions cover stocks that are likely to head substantially lower from present price levels.
SALES
WFC - Friday closing price - 24.60
WFC closed below a 13-month weekly closing low at 24.88 this past week and in the process gave the first strong sell signal seen since 2008. It is important to note that the 13-year low made in 2009 at 8.61 has not seen any kind of a serious retest since the low was made and the probabilities now favor some kind of a drop of consequence with a drop down to the $20 level being the least and most likely scenario.
Since August of last year, WFC has traded sideways between $25 and $30 for 85% of the time (15% of the time was above $30). These two price levels being mainly determined by the 100 and 200 week MA's respectively. During these past 12-months the 100-week MA has acted as strong support having been broken only on 2 occasions but the break never confirmed as the following week the stock was trading above the line once again. Nonetheless, on this occasion the break of the 100-week MA occurred 2 weeks ago and was confirmed on Friday with a second close below the line, as well as below weekly closing support, making this break all the more significant.
On a weekly closing basis, resistance is strong at 27.75, decent to strong at 30.02 and major at 33.48. On a daily closing basis, minor resistance is found between 24.88 and 25.00 and decent resistance is found between 25.52 and 25.66. Above that level there is no resistance until 27.94 to 28.57 is reached. On a weekly closing basis, support is decent between 22.87 and 23.02. Below that level, minor to decent support is found at 21.76 and then nothing until minor support at 19.61. On a daily closing basis, support is minor at 23.47, minor to decent between 22.51 and 22.91, and minor to decent again at 21.76.
WFC has given a strong sell signal this past week and if further downside is seen in the indexes (probable), the bears are likely to pounce on this stock as the strong support levels have now been broken and the ones below are minor to decent at best. In addition, having had no retest of the 8.61 weekly closing low seen in March of last year, the downside is quite open to varied interpretations as to possible downside objectives. The $20 level must be considered a good psychological support, but in looking at the chart, there is no prior support seen there. In fact, below 21.76 the support is all minor until the $15 level is reached.
To the upside, the $25 level now provides good psychological resistance as well as the resistance from the prior weekly closing low broken on Friday at 24.88. Nonetheless, in looking at the chart in the period from May to July 2009, there is decent daily close resistance up between 25.52 and 25.65 (intra-week between 25.80 and 25.98) that offers a good resistance level to use as a stop loss.
With the indexes now likely to be heading lower, financial stocks could easily become the main target of selling by the traders. In the case of WFC, the chart seems to suggest this will be one of the main recipients of selling.
Sales of WFC between Friday's closing price of 24.60 and up to 25.00 and using a stop loss at 26.10 and having an objective of 20.00 will offer a 4-1 risk/reward ratio.
My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the strongest).
SOHU Friday closing price - 47.74
SOHU confirmed the close back below the 200-week MA (currently at 48.10) this past week with a second close in a row below the line. Nonetheless, the stock was able to close in the green on Friday as well as on the high end of last week's trading range, suggesting the stock will be attempting to generate a minimal retest of the recent high at 51.88 this coming week.
SOHU does show a possible island formation with gaps on the way up from 49.35 and 49.53 and on the way down from 49.04 to 48.53. The island formation is very rare but if confirmed, would suggest that drops down to the $36-$40 area would be seen.
On a weekly closing basis, resistance is strong at 49.02. On a daily closing basis, resistance is minor to decent between 48.02 and 48.49. Above that level, there is no resistance until strong resistance is found at 50.52. On a weekly closing basis, there is minor support at 46.46 and again minor at 43.20. Strong support is found at 40.68 and then again between 39.35 and 39.55. On a daily closing basis, support is minor at 47.02 and decent at 46.37. Below that level, there is no support until minor support is found at 44.19. Additional minor supports are found at 43.09 and at 42.49, and then nothing until strong support at 40.68.
SOHU shows a recent exhaustion spike high with a rally up to 51.88 that is surrounded by gaps both of the way up and on the way down. In addition, on that rally the stock was able to close above the 200-week MA but only for 1 week, and the following week that close above the line was negated. As such, the stock maintains itself in a strong downtrend and the recent rally has to be considered simply a short-covering rally that has now run its course.
SOHU shows a previous high, prior to the rally up to 51.88, at 48.77 that has a high probability of being seen before the stock heads lower. Such a rally would fulfill all of the chart requirements for a minimal retest of the highs, a retest of that resistance level, as well as a test of the validity of the island formation. Having closed last week in the upper half of the trading range and having had a high of 48.24, a rally this coming week to 48.53 to 48.77 has a high probability of occurring. Such a rally should be sold.
Sales of SOHU between 48.30 and 48.77 and using a sensitive stop loss at 49.03 and having an objective of 39.55, offers a risk/reward ratio of 9-1. Recommendation, though, is to go without a stop loss at this time.
My rating on the trade is a 3.25 (on a scale of 1-5 with 5 being the strongest).
PURCHASES
NOK Friday closing price - 8.86
NOK has been in a downtrend of consequence since Oct07 when the stock saw a 7-year high at 42.22. The downtrend was of such consequence that last year in March, the stock made a new 11 year low at 8.47. The stock did rally when the Indexes rallied between Mch09 to May10, from 8.47 to 16.58, but once again just 2 weeks ago, the stock broke the recent low and made a new 11-year low with a drop down to 8.02. It is evident that the competition with the new giants in the smart phone industry, such as GOOG, AAPL, and RIMM, the company has been the "low man on the totem pole" and gotten the brunt of the selling.
Nonetheless, the company has no debt, is sitting on 40% cash reserves and has a strong and established status in emerging countries, making the present price the stock is at attractive. In addition, from a chart perspective this most recent break of long term support at 8.47 did not show any follow through to the downside as the next support level from 1998 at 7.37 was not reached and the stock managed to rally and close back above the previous low at 8.47, suggesting that perhaps the worst of the downside is over.
On a weekly closing basis, there is decent to strong resistance at 9.52. Above that, the $10 level should offer strong psychological resistance as well. On a daily closing basis, there is decent resistance at 9.43 and strong resistance at 9.68. On a weekly closing basis, support is decent at 8.25 and then nothing until 4.13. On a daily closing basis, support is minor at 8.41 and decent to strong at 8.02.
The trade in NOK is exclusively technical as I have little ability to evaluate the company fundamentally and cannot assess just how much the stock could appreciate in comparison with other companies in the industry. Nonetheless, I do believe there are enough fundamental and chart reasons to believe that the company may have found a bottom.
From a technical perspective, the recent 11-year low at 8.00 (8.02 on a daily closing basis) has to be considered important support right now. The stock does show an open gap between 8.62 and 8.71 that is likely to be closed as there was no fundamental news to generate a gap. In addition, the previous low at 8.47 needs to be tested as well. With the weakness in the indexes on Friday, the NOK chart shows a spike down on the weekly chart that should see follow through this coming week, thrusting the stock down to the support levels mentioned above.
To the upside, the recent high at 9.73, as well as the psychological resistance at $10 are likely to be difficult obstacles. Nonetheless, rallies up to at least the 10.03 level are likely to be seen if the stock does build a bottom. In addition, on the weekly chart there is no resistance at $10 other than psychologically, making a rally up to the 50-week MA, currently at 12.50, or even the 100-week MA, currently at 13.20 possible. Certainly those are highly probable rally points if a bottom is determined as the short-covering that would be seen on this strongly shorted stock would likely be strong.
Purchases of NOK between 8.47 and 8.63 and using a stop loss at 7.90 and having an objective of 12.50 will offer a risk/reward ratio of 6-1.
My rating on the trade is a 2.75 (on a scale of 1-5 with 5 being the highest).
RIG Friday closing price - 51.00
RIG is a stock that fundamentally has recently gone way below the price value the stock should have, based on having been "painted" with the same brush as BP and the oil spill disaster in the Gulf. Nonetheless, over the past few weeks there has been news to the effect that the company does not have the kind of economic responsibility for the disaster that other companies have and has started to show signs of a bottom having been found.
By the same token, over the past couple of weeks RIG has been affected with the weakness seen in the indexes and has given up some of its recent gains. Most of the drop, though, can be attributed to chart factors such as backing and filling as well as retesting the recent low. As soon as those are fulfilled, the probabilities favor the stock heading higher.
On a weekly closing basis, resistance is minor at 52.00, decent at 54.71 and decent to strong at 57.11. On a daily closing basis, resistance is decent to strong between 54.61 and 54.70 and strong at 57.93. On a weekly closing basis, support is minor at 47.87, decent at 46.85 and very strong at 45.26. Below that, there is decent support at 44.18. On a daily closing basis, support is minor at the 50-day MA, currently at 50.75, and then nothing until minor support is found at 46.33. Below that, there is decent support at 45.26 and strong support at 42.56.
During the general market collapse from Nov07 to Dec08 RIG went from a high of $180 to a low of $41.95 before finding strong support. The subsequent rally, during the same time period the DOW rallied from 6470 to 11258, took the stock back up to the 94.88 level where a top was found. Nonetheless, the oil spill fiasco with BP tainted the company in April of this year and caused another collapse to the previous lows with a drop down to $41.88, this happening without the indexes seeing the same kind of weakness as seen in 2008/2009. This recent drop once again found major support at the previous low, in spite of the fact that the oil problem was still at its apex. The end result of the drop down to 41.88, was that a strong double bottom was built that is highly unlikely to be broken.
Due to the recent weakness in the indexes RIG is once again showing weakness and from a technical perspective it seems highly possible that this weakness will turn into a successful retest of the double bottom that if successful could signal the beginning of a strong up-trend thereafter.
Support on an intra-week basis, should be found between 45.75 and 47.11, but on a daily and weekly closing basis, the stock should not close lower than 47.87. Based on the action and trading range seen this past week, it seems likely that RIG will see a trading range between $52 and $47 this coming week, with a slight possibility of a drop down to as low as 45.75.
To the upside, resistance will be decent between 55.00 and 55.80 and then again a bit stronger at the most recent high of 58.37. Nonetheless, above that level, there is no resistance until the 100-week MA, currently at 71.25, is reached. If the double bottom is retested successfully, the probabilities of the recent high at 58.37 being broken will be high.
Purchases of RIG between 45.80 and 47.20 and using a stop loss at 44.20 and having an objective of 71.25 will offer at least a 4-1 risk/reward ratio.
My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the highest).
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Updates
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| Updates on Held Stocks |
Closed Trades, Open Positions and Stop Loss Changes |
| NUAN had an inside week but was unable to generate enough upside to give any kind of hope of a recovery from the negative earnings reports seen 2 weeks ago. The stock was able to generate a green close on Friday and give the $15 weekly closing support level a thumbs-up for the week. Nonetheless, the inside week, the puny green close, and the negative outlook for the indexes, suggest further downside will be seen. The stock was able to stay and close above the 200-week MA, currently at 14.95, but if the recent low at 14.67 gets broken this week, drops down to the 100-week MA, currently at 13.45, will likely occur. Resistance is now strong between 15.67 and 15.85. On the outside chance that the indexes would be able to rally, the stock could also rally back up to the 200-day MA, currently at 16.00, but any further upside than that is highly unlikely. DCTH got a dose of cold water this past week with the announcement of a secondary offering of 5 million shares. The stock sold off on the news and was under pressure all week while the offering was being sold. The offering was due to be over by the end of trading Friday and therefore it is likely that the worst is over and that Monday the stock will reflect the future expectations for the company once more. The amount raised should be enough to see the company ramp up for production of the product, which normally takes about 2 years to complete. On a technical basis, the stock had a reversal day on Thursday, having made a new 6-week low and closing in the green. In addition, the 5.98 low seen has to be considered a successful retest of the previous 6-month low at 5.58. A rally on Monday above Friday's high of 6.63 could cause the stock to rally back up to the strong pivot point level, and 200-day MA, at.7.50/7.65. Should the stock get up above 6.71, that level will become decent support. A break below Thursday's low at 5.98 would be considered a strong negative at this time. IR confirmed a failure-to-follow-through signal given the previous week with another close below the 200-week MA, currently at 36.00. The stock also had an inside week, likely holding itself above the $35 level because it was considered an important expiration price. Nonetheless, the inside week suggests that further downside will be seen this coming week, and if the recent low at 34.66 gets broken, drops down to the next support level at 33.11 would likely be seen. If that level breaks, a drop down to the $30 level will likely occur. To the upside, the 200-week MA at 36.00 is likely to be strong resistance. Nonetheless, it must be mentioned that the stock shows a breakaway and runaway gap that has already been successfully tested, and therefore the probabilities strongly favor further downside. Additional short positions can and should be added on any rally up between 35.80 and 36.00. ORCL followed through to the downside after the previous weeks strong drop. Nonetheless, the stock managed to generate a small reversal having made new 5-week low and then closing in the green, as well as closing in the upper half of the week's trading range. As such, some upside could be seen this week with the 50-week MA, currently at 23.45 as the objective. It should also be known that the stock has what could be a breakaway gap between 23.39 and 23.56 that is likely to be tested. If that happens and the gap fails to be closed, and a secondary gap occurs thereafter, it would be considered a breakaway/runaway gap formation. Nonetheless, at this moment, it is likely the objective of the bulls to close the existing gap. The daily chart, though, shows a bearish inverted flag formation with the flagpole being the drop from 24.59 to 22.35 and the flag being the trading between 22.35 and 23.39. A break below 22.35 would give an objective of 21.15 which fits in well with the already established intra-week support at 21.24/21.30. Nonetheless, the probabilities favor the stock trading this coming week between 22.55 and 23.45. MMM had a strongly negative week having dropped down to the strong psychological support at $80 as well as to the 50-week MA currently at 80.10. The stock closed near the lows of the week and should see some follow through to the downside this coming week with a possible intra-week drop down to 77.25. Consideration should be given to taking profits at that level if it happens because the probable mid-term objective overall to the downside is $75, and it is possible the stock would first rally back up to the $84 level before the downside objective is reached. The short-term key (next 2-3 days) is 80.00, as a break below that level shows no previous support until the low 77's is reached. Resistance should now be decent at the 200-day MA, currently at 81.80. AMZN had a relatively uneventful week having closed above the previous week's close at 124.69 but below the recent high weekly close at 128.32. In addition, the stock closed on Friday exactly on the 200-day MA, currently at 127.70, leaving the upcoming direction "up in the air". The probabilities do favor the downside if only because that is the probable direction of the indexes this coming week. The stock did get rid of a triple top that had been formed on the daily chart at 129.92/130.00, with a rally up to 130.81. Nonetheless, the stock failed to follow through closing below the previous high daily close at 130.00 and giving a successful retest of the high signal. It is possible that the strength seen this past week was all options expiration week driven and that now the stock could start moving back down, likely to test the $120 support level. Resistance is now again strong at 130.00 and support is Friday's low at 126.02. A break of either level should generate at least a $3 move in that direction. Based on the likely direction of the indexes, the probabilities favor a drop down to $120 this coming week. MSFT managed to close just slightly below the 200-week MA at 24.40 (closed at 24.23) but looked weak doing so. In addition, on the daily closing chart, the stock gave a sell signal closing below the previous daily low close at 24.40. With no daily close support now until 23.01 and an open gap between 23.48 and 23.58, the probabilities of the stock getting down to that level this coming week are very high. On a weekly closing basis, the stock shows decent to strong support at 23.27 but if the stock closes below that level next Friday, there are only very minor supports until the stock reaches the strong psychological support at $20. Any daily close above 24.82 would now be considered a slight positive. The stop loss can now be lowered to 25.06. NTES had a bullish earnings report this past week and generated a strong rally that broke the 10-month strong weekly close resistance at 40.48 (stock closed on Friday at 41.87. The stock still shows previous 10-month intra-week highs at 42.30 and 42.43 that may hold this coming week if the indexes are heading lower. Nonetheless, if the stock confirms the breakout with another close above 40.68 next week, there is no resistance until the all-time weekly closing high at 45.24 is reached (48.50 on an intra-week basis). The stock did have a classic reversal week going below last week's low and closing substantially above last week's high. Follow through to the upside is expected. By the same token, the probabilities are high that the stock will test the $40 level at some point during the week and if the stock can generate a daily close below 39.87, a failure-to-follow-through signal would be given. The stock did show a lot of resistance intra-day at 42.00 on Friday, and the probabilities favor the stock opening lower on Monday. An drop back down to 40.00 should be used to liquidate short positions put on this past week.
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1) DCTH - Averaged long at 6.555 (2 mentions). No stop loss at present. Stock closed on Friday at 6.38.
2) AMZN - Shorted at 127.76. Stop loss is at 130.10. Stock closed on Friday at 124.69.
3) AMZN - Shorted at 125 .48. Covered short at 126.07. Loss on the trade of $59 per 100 shares plus commissions.
4) ORCL - Averaged short at 23.79 (2 mentions). Stop is to 23.76. Stock closed on Friday at 23.02.
5) NTES - Shorted at 39.84 and again at 40.54. Averaged short at 40.19 (2 mentions). No stop loss at present. Stock closed on Friday at 41.87.
6) RHT - Covered shorts at 31.94. Averaged long at 33.00. Loss on the trade $212 per 100 shares (2 mentions) plus commissions.
7) MMM - Shorted at 84.39. Averaged short at 86.045 (2 mentions). Stop loss lowered to 85.27. Stock closed on Friday at 80.66.
8) MSFT - shorted at 24.38. Stop loss now at 25.06. Stock closed on Friday at 24.23.
9) SOHU - Shorted at 47.90. No stop loss at present. Stock closed on Friday at 47.74.
10) NFLX - Shorted at 140.62. Covered shorts at 135.75. Profit on the trade of $487 per 100 shares minus commissions.
11) NFLX - Purchased at 127.39. Liquidated at 127.55. Profit on the trade of $16 per 100 shares minus commissions.
12) AMZN - Shorted at 129.92. Covered short at 128.80. Profit on the trade of $112 per 100 shares minus commissions.
13) IR - Shorted at 36.24. Averaged short at 37.145 (2 mentions). Stop loss lowered to 36.56. Stock closed on Friday at 35.22.
14) LVS - Shorted at 28.62. Covered shorts at 29.75. Loss on the trade of $113 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
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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