|
|
|
|
|
|
Issue #160 
January 31, 2010 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
|
| Correction in Progress!
DOW Friday close at 10167
The DOW continued its recent down action, in spite of great news on the economic and earnings front, with another close in the red this past week. The action was disappointing to the bulls, as there seems to be little news left that could help generate new upward momentum. In addition, the index closed below the 100-day MA for the second day in a row confirming a break of the line and leaving no support of consequence until the psychological 10,000 level is reached.
The DOW opened higher on Friday after the GDP, Mich Sent, and Chicago PMI reports all came in much better than anticipated. In addition, both AMZN and INTC had reported much better earnings the night before and also opened strongly. Nonetheless, the buying in the index was disappointing as the minor resistance above at 10285 held firm. As the day wore on, the traders became disappointed and liquidated their long positions.
On a weekly closing basis, resistance is minor at 10472 and again at 10520. Strong to major resistance is now at 10618. On a daily closing basis, there is minor but indicative resistance at 10236, decent to strong resistance between 10453 and 10472 from several previous high daily closes at that level, as well as from the 50-day MA, and decent resistance at 10520. Above that level, resistance is major at 10711/10725. On a weekly closing basis, decent psychological support is found at 10,000 (9970-10030). Below that, the 100-week MA, currently at 9840, would be seen as decent to strong support. Actual previous low support is not found until minor to decent support is seen at 9713. On a daily closing basis, other than the psychological support at 10,000, there is no previous support until minor to decent support at 97.13 is reached. Below that level there is nothing until minor to decent support is again found at 9488.
The DOW is now in the first correction of consequence since the minor correction seen in July. This correction, so far, has been 675 points and it seems probable that the 791 points correction seen in July will at least be duplicated. If that happens, it would put the index down to 9939. With the DOW getting down to 10044 on Friday, as well as closing near the lows of the day and of the week, it seems extremely likely that the 10,000 level (9970-10030) will be seen this coming week. Nonetheless, the news has not been negative and therefore the drop in price is not being supported with negative fundamentals. As such, it is possible and perhaps even probable that the chart action from 2004 could be duplicated this year, as the fundamentals and chart points are extremely alike.
In 2004, the DOW went into a 6-month correction starting in February after reaching a high of 10754. Nonetheless, the correction had 4 peaks and valleys in the process before the low of the correction was seen at 9708. The first drop down in 2004 took the index down to 10007, from which a rally began to retest the 10754 high. The rally took 2 weeks and generated a move back up again to 10571. This year the high was 10730 and it is likely that the index will get down to the 10,000 level this coming week. As such, the numbers are already matching the 2004 action.
There is one difference between 2004 and this year and that is that the recessionary action in 2003 was not as strong as it was this time in 2009. It is possible, then, that even though the action might mimic 2004, that the price ranges could be a bit wider than they were then. As such, it is likely the DOW will not stop this time at 10007 but continue on down to the 100-week MA, which is currently at 9840. It can also be "mathematically" evaluated, when compared to 2004, that a drop down to 9924 could mimic the pattern.
Either way, the probabilities of lower prices being seen this coming week are high. Nonetheless, it must be stated that in 2004 the index on the third week of the first drop did close higher on Friday than the week before. This coming week is the third week of the drop, and therefore if the same pattern is seen, lower intra-week numbers will happen but the close on Friday will be above this week's close.
At this time, the move down is more technical in nature than fundamental. Nonetheless, this week there will be one catalyst that could change everything. On Friday the Unemployment numbers come out and traders as well as investors alike are eagerly waiting for that number. That is a number that if it comes out better than anticipated, though, could be the catalyst for generating a Friday rally to close out the week out in the green. Until that number comes out, it is likely the DOW will continue under selling pressure.
Possible trading range for the week is 10165 to 9924.
NASDAQ Friday Close at 2147
The NASDAQ outperformed the other indexes to the downside this past week dropping 8% in value whereas the other indexes dropped less than 7%. In the process the index broke and closed below the 200-week MA, as well as below important intra-week lows from 2008 at 2155. The index did close on the lows of the week and the probabilities of further downside this coming week are high.
It must be noted that the NASDAQ led the way to the upside and now seems to be leading the way to the downside. The break below the 200-week MA, currently at 2210, has to be considered a strong indication that the high for several months in now in place. Such a break of the MA likely means the index is now in a corrective phase that will prevent further closures above the line in the near future.
On a weekly closing basis, resistance is now decent at the 200-week MA at 2210, minor to decent between 2250 and 2274 and major at the most recent high weekly close at 2317. On a daily closing basis, resistance is minor at 2212 and minor to decent at 2221. Above that level there is minor resistance at the 50-day MA, currently at 2228, minor resistance again at 2291, and major resistance at 2317/2320. On a weekly closing basis, there is minor support at 2138 and strong support at 2045. On a daily closing basis, support is minor to decent at 2138 and then absolutely nothing until 2045 is reached.
The NASDAQ on Friday, broke and closed below the 100-day MA, currently at 2176. That is considered a negative that could generate further downside this coming week. Nonetheless, the index was able to hold itself above the minor weekly closing and decent daily closing support at 2138 (got down to 2140). In addition, the index closed the open gap between 2147 and 2158 that had been left open since the end of November. As such, that particular magnet has been annulled. It is evident that any further weakness this coming week could be strongly negative as below 2138 (2114 on an intra-week basis) there is absolutely no support until 2045 is reached. On the other side of the coin, any strength on Monday with a higher close would be reason to believe that a rally back up to the 200-week MA at 2210 could be seen.
Because of the reasons mentioned above, the NASDAQ could once again be the "weather vane" for what the indexes do this week. It has to be mentioned, though, that a second close below the 100-day MA would be a strong negative and that means that the only way to prevent that from happening would be to generate a strong rally on Monday to close above 2176. Based on the weakness seen on Friday, that is unlikely to happen. It must therefore be assumed that further weakness will occur and that the support at 2138 will be broken, generating a 2024/2041 objective (intra-day lows seen in October and November).
The probabilities do favor the NASDAQ continuing to be the weak sister this coming week as this index has the most room and reasons to drop, at least from a chart basis. It must be mentioned, though, that the index shows a double bottom of consequence on the daily closing chart at 2048/2049. That level will be strong support but also a strong magnet if the index heads lower. If broken, the probabilities of the stock getting down to the 100-week MA, currently at 1982, will be high.
The probabilities do favor further weakness this coming week but the November 27th intra-day low at 2114 will likely be the key to this week's drop. A break of that support will likely cause the NASDAQ to drop strongly, whereas the other indexes may not go down as strong. It must be mentioned that in 2004, the index did not mimic closely the other indexes, and somewhat moved on its own. That means that keying on the NASDAQ may not relate to the same amount of weakness, and/or strength, of the other indexes.
S&Poors 500 Friday close at 1073
The SPX also generated and confirmed a break of the 100-day MA, currently at 1088, with a second close in a row below that level on Friday. The index shows absolutely no support of consequence, other than the 100-week MA at 1060, until the November low at 1029 is reached. Having the "clearest" chart of all the indexes, it is likely the SPX will be the index the traders will follow this week, for direction and objectives.
The SPX built a coil formation in November and December between 1084 and 1119, When the top of that coil was broken the objective became a rally up to 1154. The index got as high as 1150. This past week, the bottom of the coil formation was broken, giving an objective of 1149. This objective fits in well with the 100-week MA line at 1060.
On a weekly closing basis, resistance will now be major at the most recent high close at 1145 and minor at a previous weekly closing high at 1126. On a daily closing basis, resistance is minor but indicative at the most recent high close at 1098. Above that level resistance is decent to strong between 1110 and 1114, decent again at 1128, and major between 1147 and 1150. On a weekly closing basis, support is decent at 1136 and again at 1125. Below that level, there is no previous support of consequence, other than the psychological support at 1000, until an important previous high, as well as 50-week MA, is reached at 970. On a daily closing basis, support is non-existent until minor support at 1043 and decent at 1036. Below that level, support is decent again at 1025 and then nothing until the 200-day MA, currently at 10014. Strong psychological support is found at 1000.
Like the DOW, the SPX also shows a correction back in 2004 with several peaks and valleys. The overall objective of a correction is likely to be the 1000 level. Nonetheless, It is probable that getting down to that level will not happen in a fell swoop, but over a period of time. As such, it is probable that the 100-week MA will hold up this coming week, at least on a weekly closing basis. Drops down to the broken coil formation objective of 1049 could be seen, but if Friday's unemployment report becomes a positive catalyst, the index could end up closing above 1060.
On the negative side, though, the index has no support on the daily chart until 1029 (1036 on a daily closing basis) is reached. In addition, the chart formation suggests an inverted upside pennant formation is in place that offers an objective of at least 1046. As such, it is likely the index will be under selling pressure all week and will require some positive news by Friday to prevent a break of the 100-week MA.
With the break of the 100-day MA, currently at 1088, it is unlikely the index will be able to get above that level this coming week. Based on last week's trading range of 32 points that would suggest a possible trading range between 1088 to 1056 this coming week.
The probabilities are very high that the indexes will be heading lower, at least for the first part of the week. Being unable to generate any kind of meaningful rally after the strong positive news that came out this past week, the traders are likely to keep the selling pressure on until Wednesday's ISM report and/or Friday's important Unemployment report.
On a chart basis, there are no close-by supports that can be relied on to bring out the bulls. Nonetheless, with the lack of negative fundamental news, it is also unlikely that aggressive selling will be seen. The probability of the indexes getting back into some chart trading that includes peaks and valleys is high. As such, it is likely more important at this time to follow chart points than fundamental news,
Expect weakness at the beginning of the week. Nonetheless if the Unemployment report on Friday comes out as expected or better, the probabilities will then favor a late week rally as well as a higher weekly close.
|
Stock Analysis/Evaluation
|
|
CHART Outlooks
CHART Outlooks
This week the mentions are mixed between purchases and sales. Nonetheless, the purchases require a further drop in price and likely won't occur until the end of the week, whereas the sales are immediate and likely to be done on Monday. The sales are likely to be short-term, taking advantage of the anticipated drop in price expected to be seen in the indexes at the beginning of the week.
Nonetheless, both the sales and purchases offer strong chart points of support and resistance that increase the probabilities of success even if the indexes don't act as expected.
SALES
VCLK (Friday's closing price - 9.25)
VCLK lowered its guidance on October 28th causing the stock to gap down 13% in value in one day (12.35 versus 10.73). Since that drop the stock has built an inverted flag formation with the sideways trading range between 9.08 and 10.85 seen over the past 12 weeks. The inverted flag is a bearish formation that projects a drop down to the 5.99 level if the bottom of the flag at 9.08 is broken.
VCLK has tested the gap area successfully on 2 different occasions (November and January) and is now back to the lows seen on 4 different occasions over the past 3 months. With the indexes likely to continue to fall, as well as the repeated return to the lows, the probabilities have increased exponentially of a break of support.
On a weekly closing basis, resistance is strong between 10.28 and 10.38, decent between 11.82 and 12.17, and major at 13.50. On a daily closing basis, resistance is decent to strong resistance between 9.95 and 10.03. Above that level, resistance is decent to strong between 10.42 and 10.50, and very strong at 10.78. On a weekly closing basis, no previous support is found until the area between 5.49 and 5.89 is reached. Support is considered major at that level. On a daily closing basis, support is strong between 9.21 and 9.24. Below that level there is no support until minor support at 6.32 and major support at 5.50 is reached.
VCLK closed on Friday at 9.25 and now shows 4 different intra-week lows between 9.08 and 9.17 and three daily closes between 9.21 and 9.25. Such an array of bottoms and closes (more than 2) generally means that the area of support will be broken. In addition, the indexes are presently showing weakness and will likely continue lower for at least the next few days, if not longer.
Below the 9.08 area (9.21 on a daily closing basis) there is no support of consequence until the March lows in the mid 5's are reached. There is some very minor support at 8.90 and again at 7.78, but the key word is minor. As such, any break below the 9.08 level is likely to generate aggressively selling and a drop down to the next level of strong support below $6.
It must also be mentioned that VCLK is in an area of online advertising that has been consistently losing popularity over the past couple of years and is not expected to recover. In addition, the company is trying to compete against giants like GOOG and YHOO as well as new companies like Bing. As such, unless the company changes the services it offers, it is likely to continue to erode in value as time goes on, regardless of what the stock market does.
Sales of VCLK between 9.30 and 9.50, using a stop loss at 10.05 and having an objective of 5.99, offers 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 probability).
BEXP (Friday closing price 13.04)
BEXP has been on a major trend up since March of last year when the stock got as low as $1.04. Since then the stock got into a 10-month rally that took it to a high of 15.70 4 weeks ago. Nonetheless, since that high was made the stock has been showing signs of a top being formed and this past week it gave a sell signal when it closed below the most recent low weekly close support at 13.55. With no support built up until the 11.25 level is reached, the probabilities of the stock heading lower this coming week are high.
In addition, BEXP had a reversal week this past week with higher highs, lower lows and a close in the red. It is evident that the stock is now on a corrective phase after seeing a $14.70 rally to the upside and an increase of 1500% in price.
On a weekly closing basis, resistance is major between 14.50 and 14.67. On a daily closing basis, resistance is minor to decent at 13.43, at 13.75 and at 13.91. Above that level strong resistance is found at 14.67 and major at 15.49. On a weekly closing basis, support is decent between 12.08 and 12.16. Below that level there is no support until minor supports at 11.13, 10.62, and 9.50 are reached. No major support is found anywhere close. On a daily closing basis, minor support is found at 12.98 and then nothing until the 100.day MA, currently at 11.25, is reached. Below that level there is no support of consequence until the 200-day MA, currently at 7.50, is reached.
BEXP has evidently found a temporary top, much like the indexes have done. In addition, with the reversal week last week, the probabilities have increased that the stock will continue heading lower this coming week. It is important to note that other than the 100-day MA currently at 11.25, the recent supports are all minor. One has to go back to Aug/Sep of 2008 to find strong support at the same price. With the meteoric rise the stock has seen over the past 10-months, it is possible that a strong profit-taking binge will occur now that a top has been established. As such, the support levels are suspect.
By the same token, it is expected that BEXP will probably have the same kind of peaks-and-valleys correction expected for the indexes, with a possible downside objective over a period of 6-month of a drop down to the psychological support at $10. It is also possible that a previously strong resistance level at $8, in effect prior to the breakout, could be tested before it is all over and done.
This past week's high at 13.98 has to be considered strong resistance due to the reversal week. In addition, the stock has a slew of small daily close resistances that start at 13.43 and go up to 13.91 that are unlikely to get broken. With no support of consequence below until the 100-day MA at 11.25 is reached, that will be the primary objective.
Sales of BEXP between 13.33 and 13.50 and using a stop loss at 14.04 and having an objective of 11.25 will offer a risk/reward ratio of almost 4-1.
My rating on the trade is a 4.00 (on a scale of 1-5 with 5 being the highest probability).
PURCHASES
YGE (Friday closing price - 12.52)
YGE has dropped over the past 3 weeks from a high of 19.11 to Friday's low of 12.34 based on the belief that the Democrats will have to give something to the Republicans in order to find compromises they can live. It is believed the compromises will come in the Clean Energy area. As such all companies in this industry have been sold recently.
Nonetheless, YGE is now reaching an area of support at $11 that should hold and from which a short fast rally should occur, much like what is expected to be seen in the indexes over the next couple of weeks.
On a weekly closing basis, resistance is minor at 14.05, strong at 15.10 and major at 18.10. On a daily closing basis, resistance is very minor at 13.47 and strong at 14.26. Above that level, minor to decent resistance is found at 15.27 and strong at 16.09. Major resistance is found at 18.84. On a weekly closing basis, support is strong at 11.58, decent to strong at 11.02, and strong again at 10.24. On a daily closing basis, minor to decent support is found at 11.58, and strong support between 10.19 and 10.27.
It is likely that the stock will be seeing further selling at the beginning of the week as the stock closed below the 200-day MA on Friday. A drop down to the 11.17 to 11.48 area of strong support is expected. Nonetheless, at that level the support built in October and November is likely strong enough to generate a rally back up to at least the $15 and a retest of the 19.11 high. No retest of the highs has yet occurred and it is likely to happen at some point, sooner rather than later.
It is possible, perhaps even likely, that the stock is under the same kind of correction as the indexes are seeing, with peaks and valleys to be seen over the next 3-5 months. In the case of YGE, the ultimate objective to the downside is likely to be the $10 level. At that level the psychological as well as previous support is strong.
One thing that cannot be downplayed is that much of this correction is due to a "perceived" idea that the government may be giving in, somewhat, on the support for clean energy. Nonetheless, the President has not yet made such a statement and if untrue, the entire drop in price seen recently could be erased. One thing for sure, the support between $10 and $11 goes all the way back to when the stock started trading in 2007. As such, it really would require a total breakdown of support for clean energy from the government to generate a drop below these levels.
For the short term, though, the stock should find good support at 11.48. If it does, the probabilities of the stock rallying up to the intra-week high seen in June at 16.35 would be high. The resistances before that level is reached are minor in nature, with minor resistance found between 14.50 and 14.78 and then nothing until minor to decent resistance is seen at 16.17.
It is likely the stock will be under pressure the first couple of days of the week and then generate a rally toward the end of the week, much like what is expected to be seen in the indexes.
Purchases of YGE between 11.48 and 11.76 and using a stop loss at 11.07 and having an objective of 16.15 will offer a risk/reward ratio of 6-1.
My rating on the trade is a 3.5 (on a scale of 1-5 with 5 being the highest probability).
ELON (Friday's closing price - 8.48)
ELON, as well as many companies tied in to clean energy, are being sold recently because of fears the Democrats will have to give something to the Republicans in exchange for help in other areas, such as health. The belief is that clean energy is where compromises are most likely to be seen. As such the whole industry has been hit with selling over the past few weeks.
ELON has broken below the psychological support level at $10 and is now on the verge of closing the gap that was left back in August when a very positive earnings report was released. Nonetheless, from a fundamental basis regarding the company itself, it is unlikely that much further selling will occur.
On a weekly closing basis, minor to decent resistance is found at the 100-week MA currently at 10.20. Above that level, decent resistance is found between 12.81 and 12.98 and then major resistance up at 14.20/14.40. On a daily closing basis, resistance is very minor at 9.73 and decent at the 200-day MA currently at 10.40. Above that level, resistance is strong between 11.97 and 12.31. On a weekly closing basis, support is minor to decent at 8.30 and strong between 7.01 and 7.35. Below that level support is major at the double bottom at 5.30/5.40. On a daily closing basis, support is decent at 7.98 and very strong at 7.01.
It must be mentioned that ELON throughout the last 5 years, with the exception of the 2008/2009 (recessionary period) when the stock fell to $5 and 2006/2007 (strong market rally) when the stock rallied to $32, has basically traded between the $7 and $15 level. As such, the recent drop in price due to the industry's ills should be seen as an opportunity to buy. In addition, ELON is a company that is now beginning to expand in a faster way due to proprietary and increasingly-sought-after clean energy products it offers.
ELON left an open gap between 8.38 and 9.34 in August when the company reported better earnings than expected. With the recent weakness, that gap is now a magnet and likely to be closed. Nonetheless, the stock has come down to the breakout area of a 10-month trading range where the top was clearly defined by 8.89 and 8.84 from which it broke above when the recessionary period of 2008/2009 ended. It is then probable that the stock after, closing the gap, will get back above those previous highs.
Resistance will be decent up at the $10 psychological level. Nonetheless, the stock has pivoted around that level consistently over the past 5 years and there seems to be no reason that resistance will be stronger this time around. The stronger resistance is likely to be the 200-week MA, which is currently up at 11.73. That line is likely to play the most pivotal role during the next 6 months.
Purchases of ELON between 8.15 and 8.39 and using a sensitive stop loss at 7.65 and having an objective of 11.73 will offer a risk/reward ratio of 4-1.
My rating on the trade is a 3.50 (on a scale of 1-5 with 5 being the highest probability). The rating is not as high as it could be only because there is a slight chance the stock will drop down to the 7.00 level.
|
Updates
|
| Monthly & Yearly Portfolio Results
|
Closed Trades, Open Positions and Stop Loss Changes
|
|
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 1/1 Profit of $0 using 100 shares per mention (after commissions & losses) Closed out profitable trades for January per 100 shares per mention (after commission)
RIMM (short) $299 AXP (short) $358 DDM (short) $96 HPQ (short) $204 Closed positions with increase in equity above last months close. HPQ (short) $355 Total Profit for January, per 100 shares and after commissions $1312 Closed out losing trades for January per 100 shares of each mention (including commission)
SOHU (short) $187
SOHU (short) $119 PCX (long) $255 AMZN (long) $3 TRA (long) $50 VALE (long) $46 ELON (long) $11 AMZN (short) $106 Closed positions with decrease in equity below last months close.
VALE (short) $139 Total Loss for January, per 100 shares, including commissions $1130 Open positions in profit per 100 shares per mention as of 1/31
NYK (short) $292 TRLG (short) $151 PFE (short) $138 WMT (long) $77 CAL (short) $518 AXP (short) $13 Open positions with increase in equity above last months close.
VCLK (short) $87 Total $1329 Open positions in loss per 100 shares per mention as of 1/31
FTEK (long) $94
TRA (long) $285 VALE (long) $434 Total $813 Status of trades for month of January per 100 shares on each mention after losses and commission subtractions.
Profit of $698
Status of account/portfolio for 2010, as of 1/31Profit of $698 using 100 shares traded per mention.
NUAN spiked down this past week and closed on the lows of the week. It is expected that lower prices will be seen this coming week. The stock did close at a very important weekly close support at $15. As such, it is possible that next Friday the stock will be able to close higher as this support is strong. The $15 level must be considered a major pivot point on the weekly chart. Nonetheless, that does not preclude the stock going lower intra-week. On a daily closing basis, the stock has decent support at 14.79 as well as support at 14.92 from the 100-day MA. Nonetheless, those supports are not the kind that can be counted on to generate strong buying if the indexes are under pressure. If the stock closes below 14.79 level on Monday or Tuesday, it is likely that drops down to 100 and 200 week MA's, as well as the 200-day MA, all of which are between 13.77 and 13.92, will be seen. Any daily close above 15.24 could now be considered slightly positive.
VCLK is now at a "major" pivot point that has a high probability of being broken and generating strong downside movement. The stock on Friday closed back at a major double bottom at 9.21/9.24 with a close at 9.25. As such, even if the support level holds up this time around, the fact that it would now be a triple bottom increases the probabilities of it being broken exponentially. In addition, the stock continues to show a major inverted flag formation on the weekly chart that if broken (a drop below 9.21) would give a 5.99 objective. After attempting to get into the gap between 12.35 and 10.77 with a rally up to 10.85, as well as getting above the 200-day MA at 10.78 but failing to maintain it, the stock is now back under strong selling pressure. In addition, the stock now shows 2 successful retests of the recent high at 10.85 with rallies up to 10.43 and this week's 9.95. The stage is now set for a break, especially with the expected weakness to be seen this week in the indexes. Keep in mind that a break below 9.21 will likely bring in strong selling and a fast drop down to $6. Any rally above 9.95 now, would take some of the selling pressure off. AIPC, after 5 weeks of closing between 34.79 and 35.00, as well as attempting to make a new 6-year weekly closing high, finally gave up the ship and closed Friday at 34.26. In addition, and probably even more important, on the monthly chart the stock now shows a double top at 34.79/34.81 that looms ominous. It is evident that further upside is not likely to happen without some strong positive fundamental news. The technical traders have tried for the past 5 weeks to rally the stock but have failed. It is now unlikely they will try again without fundamental help. With no support of consequence built up until the $30 level is reached, drops down to that price are now likely to happen. Any daily close above 35.30 would now be considered a positive. AXP generated a break of the 100-day MA, currently at 38.00, on Thursday and confirmed the break with another close below the line on Friday. In addition, the stock once again closed in the bottom half of the week's trading range giving notice that further downside is to be expected this coming week. On a weekly closing basis, decent support is found at 36.63, but on an intra-week basis, no support is found until 35.55. A bit stronger support is found at 35.10. The probabilities favor a drop down to the 35.55 level this coming week with a possible trading range, based on last weeks trading range, of 38.00 to 35.55. Stops should be lowered to 38.46. FTEK has been unable to generate any kind of buying and has continued to deteriorate consistently having 8 out of the last 9 trading days close in the red. The stock is now close to the lowest weekly closing low since sep05 at 7.25 (closed Friday at 7.33). With the indexes likely heading lower this coming week, it is probable that the stock will also get hit with more selling, especially if the stock generates a daily close below 6.84. It is important to note that in Nov08 the stock did see an intra-day low at 6.08. It is unlikely, though, that next Friday the stock will close in the red as the probabilities do favor the indexes generating a late week rally. Nonetheless, intra-week the stock is at risk of dropping. My own game plan is to hold on to the stock through this week, no matter what happens. Nonetheless, if the stock is unable to generate a green close next Friday, I will likely liquidate the positions. TRLG closed below the 100-week MA at 19.85 but was able to stay above the 200-week MA at 18.95. The stock did successfully test the psychological resistance at $20 on Thursday with a rally up to 19.95. Nonetheless, no other negative signal was given. Keep in mind, though, that the stock is still trading under a bearish weekly flag formation that if broken (a break below 17.30) projects a drop down near the $10 level. Nonetheless, the probabilities of this happening diminish with each passing week the stock does not break the 17.30 low. This past week the stock closed the gap between 19.07 and 19.68 with a drop down to 19.02. If closing the gap was the only downside objective, the stock should have gotten above the $20 level this week. Since it didn't, further downside is probable. There are 3 daily close supports underneath at 18.49, 18.26, and 17.57. Any one of those 3 could be a possible downside objective this week. I do expect weakness this coming week, but not likely below 17.91. NYX continued to show weakness generating a new 8-month daily and weekly closing low on Friday. With no weekly closing low of consequence until 19.32 is reached, and no daily closing low of consequence until the psychological support at $20, the probabilities of the stock heading lower are high, especially if the indexes drop as expected. Stops should be lowered to 24.31. It must be mentioned that on the weekly chart the stock does show minor to decent intra-week support at 22.18 and again at 21.77. Nonetheless, drops down to that level are highly likely to be seen this coming week. TRA acted much like a yo-yo this coming week but when the dust cleared the stock managed to close below the double bottom on the weekly chart at 31.77/31.90. In addition, the stock had a reversal type of day on Friday, generating a strong rally up to 33.63 and closing near the low of the day at 31.60. Such action will be seen in a disappointing light and will likely generate a move down to the psychological support at $30. The stock did close on Friday right on the 200-day MA at 31.60. As such, if the stock is to prevent the drop down to $30, it must open higher on Monday and close in the green. Any break below Thursday's low at 30.94 will put the stock on the defensive and with a slight bearish tone. Keep in mind, though, that going back to 2007, the $30 level has been important and pivotal. On 4 different occasions, on the intra-week chart, it was the high of the move and 2 occasions the low of the move. Such a support is not likely to get broken without some negative fundamental news, such as are not likely to exist at this time. If short-term trading, a stop loss at 30.84 could be used. Nonetheless, a drop down to 30.00 should be bought. VALE confirmed a minor sell signal with a second weekly close below 27.47. Support below, on a weekly closing basis, is at 25.49. Nonetheless, on an intra-week basis, there is no support of consequence until 24.00 is reached. That support, though, can be considered strong, perhaps even very strong. The stock did close near the lows of the week and further downside is expected. On the daily chart, support is decent between 24.78 and 25.00. It is likely that level will be seen this coming week, especially if the indexes show weakness (likely). Based on the nature of the support there, a rally back up to the 100-day MA, currently at 27.00 could be seen late in the week. Any rally above 27.00 will likely take the stock up to the bottom of the breakaway/runaway gap formation at 28.58. Possible trading range for the week could be 24.95 to 28.00. Nonetheless, weakness will likely be seen first. Overall, though I expect the stock to trade over the next 3-5 months between $23 and $30. CAL closed on the lows of the week and will likely see follow through to the downside with 17.19 being a likely objective. It is probable, though, that the 17.50 level on a daily closing basis will not be broken. Support at that price is strong, not only from previous daily low and high closes, but also from the 50-day MA. Nonetheless, if the indexes are in a 6-month correction phase, it is likely that the stock will trade between $15 and $20 during that period of time. As such, if positions are liquidated this week on drops down to 17.19.17.50, they should be re-shorted on any rally up to $20. WMT once again showed a successful retest of the 200-week MA with a green close this week, making the previous week's close at 52.95 the second successful test of that line, currently at 53.00. In addition, the stock got an upgrade from Goldman Sachs on Friday causing the stock to spike up. Unfortunately the stock was unable to generate a new buy signal on the chart when it failed to close above 53.80 (closed at 53.43). As such, it is probable the stock will be under some selling pressure (not likely much) this coming week if the indexes drop in price as expected. Overall, though, the stock has shown a strong ability to go against the indexes and with all the successful retests, as well as the bullish flag formation on the weekly chart the stock has, a strong upside move is expected to be seen sometime in the next couple of weeks. Any move below 52.31 would be bearish. Stops should be at 52.21.
|
1) VCLK - Shorted at 9.76. Stop loss lowered to 10.05. Stock closed on Friday at 9.25.
2) VALE - Purchased at 30.13. No stop loss at present. Stock closed on Friday at 25.79.
3) AIPC - Shorted at 32.73. No stop loss at present. Stock closed on Friday at 34.26.
4) AMZN - Shorted at 125.51. Covered at at 126.43. Loss on the trade of $96 per 100 shares plus commissions.
5) WMT - Averaged long at 53.025 (2 mentions). Stop loss is at 52.06. Stock closed on Friday at 53.43.
6) HPQ - Shorted at 50.00. Averaged short at 51.24. Covered shorts at 47.82. Profit on the trade of $692 per 100 shares (2 mentions) minus commissions.
7) CAL - Shorted at 20.48. Averaged short at 20.98 (2 mentions). Stop loss lowered to 19.80. Stock closed on Friday at 18.49.
8) NYX - Shorted at 24.12. Averaged short at 24.87 (2 mentions). Stop loss lowered to 24.31. Stock closed on Friday at 23.41.
9) VALE - Purchased at 29.03. Liquidated at 28.71. Loss on the trade of $32 per 100 shares plus commissions.
10) FTEK - Purchased at 8.27. No stop loss at present. Stock closed on Friday at 7.33.
11) TRLG - Shorted at 20.82. Stop loss now at 20.05. Stock closed on Friday at 19.31.
12) AXP - Shorted at 41.64. Liquidated at 37.92. Profit on the trade of $372 per 100 shares minus commissions.
13) TRA - Purchased at 33.70 and again at 32.35. Averaged long at 33.025. No stop loss at present. Stock closed on Friday at 31.60.
14) ELON - Liquidated at 9.43. Purchased at 9.40. Profit on the trade of $3 per 100 shares minus commissions.
15) PFE - Shorted at 20.04. Stop loss now at 19.20. Stock closed on Friday at 18.66.
16) VALE - Purchased at 26.55. Liquidated at 26.09. Loss on the trade of $46 per 100 shares plus commissions.
17) AXP - Shorted at 37.77. Stop loss at 38.46. Stock closed on Friday at 37.66.
Previous Newsletters
|
Encyclopedia of Chart Patterns. A must have for chart aficionados! |
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. |
|
|
|