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Issue #179 
June 13, 2010 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Downtrend Halted, Options Expiration Week Ahead!
DOW Friday closing price - 10211
The DOW negated last week's break of weekly close support at 10012 closing above that level on Friday. The explanation given by some analysts was the positive Michigan Sentiment report that came in higher than anticipated showing improvement in the nation's sentiment regarding the economy. The report was a surprise as the report often follows the action in the indexes and that was down for the month of May.
Though the action was positive on both Thursday and Friday, the weekly chart continues to look negative. The DOW is presently showing an inverted flag formation on the weekly chart that projects a drop down to 9370 if the bottom of the flag at 9758 is broken. The top of the flag is at 10315, which was not broken or even tested on this late week rally.
On a weekly closing basis, resistance is very minor at 10472 and decent to strong up at 10618/10620. Above that level there is no resistance until major resistance is found at 11204. On a daily closing basis, there is strong resistance at 10255/10259 and decent to strong at the 200-day MA, currently at 10315. Above that level, there is decent resistance at the 100-day MA, currently at 10540 and strong resistance at 10725. On a weekly closing basis, support is decent at 10012 and decent again at 9932. Below that level, there is decent support at the 100-week MA, currently at 9530. On a daily closing basis, support is minor to decent at the "demilitarized zone" between 9970 and 1030, minor at 9908, and decent to strong at 9816. Below that level there are minor supports at 9713, at 9488 and again at 9218.
It is evident that the rally at the end of last week has shifted the "immediate" mood of the market from strong selling pressure to wait-and-see attitude for the time being. There are still many catalysts hovering around and they are all mainly negative ones. As such, it is difficult to imagine the bulls will be able to generate much further upside without fundamental help. Nonetheless, this coming week is options expiration week and it is likely the traders will try to defend some of the more important option expiration prices, though that may not include being able to generate a rally of consequence, just holding support.
It is important to note that the 10315 level, on an intra-week basis, has now taken more importance. First of all, that was a minor high seen back in February "prior" to the then successful retest of the 100-week MA, at that time at 9835. Nonetheless, 10315 was also the high seen 2 weeks ago when the index tested the 200-day MA successfully and is also the top of the inverted flag formation on the weekly chart that is ominously hanging over the DOW.
It must also be mentioned that the DOW is presently showing a double top on the daily closing chart at 10259/10255 as well as the 200-day MA, on an intra-week basis, now at 10315. As such, it looks as if the index is going to have a tough time this coming week overcoming these chart resistance levels. There are no economic reports due out until Wednesday and the reports this week could actually be tilted toward hurting the indexes rather than helping as CPI and PPI can be considered "possible" negative catalysts but not possible positive catalysts.
Nonetheless, it is very likely that the bulls will be attempting to establish something positive early in the week, trying to capitalize on the strength seen at the end of last week as well as on the dearth of economic reports on Monday and Tuesday, and if they are able to get above 10315 and close above the 100-day MA there, rallies up to the next resistance level at 10500/10600 would likely be seen. If the bulls are not successful, though, there will be disappointment and the bulls will spend the rest of the week defending support levels such as the demilitarized zone at 9970/10030, the minor daily close support at 9908, as well as the previous weekly closing support at 10012.
In looking at the weekly chart, as well as at the inverted flag formation, and considering that last week's trading range was 458 points (10216 to 9758), I can see a trading range this coming week being 10264 to 9835.
NASDAQ Friday closing price - 2244
The NASDAQ was able to generate a green close this week making last week's close at 2219 into a picture perfect successful retest of the 200-week MA, currently at 2218. The NASDAQ continues to be the index the bulls are watching closely as it still maintains itself in a weekly close uptrend. Until such a time that the index closes below the 200-week MA, it cannot be said that a downtrend in the indexes has begun.
Nonetheless, the bounce this week did not accomplish breaking any previous daily or weekly close resistance levels so it cannot be classified as anything more than a defensive bounce trying to prevent a strong sell signal from being given. This action could be more in line with trying to defend option expiration prices this coming week than with any positive outlook for the index.
On a weekly closing basis, very minor resistance is found at 2257, decent resistance is seen at 2317 and minor to decent at 2347. On a daily closing basis, there is minor resistance at 2244, minor to decent at 2278 and strong at 2303, as well as at 2320. On a weekly closing basis, support is strong at 2218 (200-week MA) and decent at 2212. Below that level, there is strong resistance again at 2141 and nothing until the strong psychological support at 2200, as well as at the 100-week MA, currently at 1970. On a daily closing basis, support is very minor at 2222, decent at 2196 and decent to strong at 2159. Below that level there is decent support at 2126 and then nothing until decent to strong support at 2048.
Though the NASDAQ was able to generate a green close this week making last week's close at 2219 into a successful retest of the 200-week MA, the index still maintains a weekly closing chart that is on a recent downtrend and looking tilted toward further downside. Had the index been able to close on Friday above 2257, a very small buy signal would have been generated suggesting further upside action over the next couple of weeks. Nonetheless, since that did not occur, the successful retest of the 200-week MA could mean just a 1 week delay due to options expiration before the sell signal will be given.
It must be mentioned that 3 out of the last 4 weeks the NASDAQ has traded intra-week below the 200-week MA and probably even more important to note that on 2 out of the last 3 weeks, the intra-week support from Mar/Jul 2008 at 2155/2167 was broken with drops down to 2141/2139 respectively. This suggests that the support levels are weakening and not receiving the kind of buying that would suggest the index is bottoming out and looking to go higher. As such, it seems evident that without some strong fundamental positive coming out, that the support will continue to be eroded until such a time that a strong sell signal is given.
Nonetheless, the index did generate good buying on Thursday and Friday and did close on the highs of the week, suggesting some follow through will be seen. On an intra-week basis, rallies up to 2278 could and probably will be seen, with a lower possibility that a minor resistance at 2252 will hold the index down. If those levels are broken, though, a rally up to at least 2307 and perhaps even as high as the 100-day MA, currently at 2320, could occur.
Like with the DOW, the NASDAQ is facing levels of important resistance this coming week and Monday and Tuesday will likely be the days the bulls will try to break that resistance down. If they fail, though, there will be disappointment and the bulls will likely be all-out to prevent the index from closing next Friday below the 200-week MA. Intra-week support should be strong this week between 2166 and 2186. it is likely that at least for this coming week, those levels will hold. Possible trading range for the NASDAQ this coming week, based on last week's trading range of 105 points, is 2278 to 2166.
SPX Friday closing price - 1092
The SPX is now showing a strong double bottom on the weekly closing chart at 1066/1065, having closed in the green this past week. Such a double bottom suggests the index could rally up to the 1136/1150 level, but the chart is also showing the same kind of inverted flag formation as the DOW, with the top of the flag being 1104/1106, and therefore it is very likely that a battle between the bulls and the bears will ensue at that price, with the bears trying to keep the inverted flag alive and strong, while bulls trying to benefit with the double bottom to squeeze the most of the upside available.
Nonetheless, on the intra-week chart, the SPX has now gone down to the 1141/1145 area on 3 different occasions since February, thus generating a triple bottom that is likely to act as a magnet on any weakness, lowering the probabilities of the bulls from being able to generate a rally up to 1136/1150.
On a weekly closing basis, there is no resistance until minor resistance is reached at 1136. Above that level, strong resistance is found at 1145 and then nothing until major resistance at 1217. On a daily closing basis, resistance is strong at a double top seen at 1103/1104 and then decent at the 200-day MA, currently at 1108 as well as at a previous minor daily high close at 1109. Above that level, there is no resistance until the 100-day MA, currently at 1133. Decent to strong resistance is found at 11/47/1150. On a weekly closing basis, strong support is found at the double bottom at 1066/1065.
Below that level, minor support is found at 1136 and decent support at 1025 from a minor weekly close as well as from the 100-week MA at 1020. On a daily closing basis, minor support is found at 1068/1071, minor again at 1057 and strong at 1050. Below that level, decent support is found at 1025 and decent to strong support at 994.
This coming week will be very important for both the bulls and the bears. The bulls now have a strong double bottom base at 1066/1065 from which to generate strong buying. Nonetheless, the bears do show an ominous inverted flag formation at 1104 they are likely to defend. Just like with the other indexes, the battleground this week is clearly defined and whoever comes out the victor is likely to see the spoils of that victory the following week.
It must be mentioned that the double top on the daily closing chart at 1103/1104, as well as the 200-day MA, currently at 1108, are going to be formidable resistance levels that are unlikely to get broken without fundamental help. With the index having closed on Friday at 1092, it is expected, though, that at least the 1100/1104 level will be seen this week and therefore follow through to the upside is highly likely for Monday and Tuesday.
With this being options expiration week, it is going to be difficult for the bears to generate new lows below last week's lows and therefore the 1066 down to 1056 level is likely to act as good support this week. Based on last week's 50 point trading range, I would venture to say the index will trade between 1104 and 1056.
The possible downtrend was interrupted this past week when the indexes closed in the green on Friday. The reasons are not yet totally clear as to why the rally occurred but it is possible that this coming week's options expiration had something to do with it. As such, the indexes are likely facing a volatile week with two-way red and green trading throughout, but with no specific direction of consequence.
The start of the week, though, is likely to be important as follow through is expected to be seen on Monday after the strong close on the highs of the week on Friday. This is especially true since the market was able to shrug off a negative Retail Sales report and generate a green close. Nonetheless, there are important close-by resistance levels above that are likely to give an early indication of just how much "real" strength was actually generated.
None of the economic reports this coming week are expected to be catalysts of consequence but if they are, the probabilities favor the downside as some of the reports such as CPI and PPI are unlikely to offer much support to the upside whether they come in higher or lower. By the same token, there are no reports until Wednesday, so it is likely that technical chart trading will dominate the first few days of the week.
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Stock Analysis/Evaluation
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CHART Outlooks
The probabilities are high that the reason for the rally this past week was due to this coming week being option expiration week. As such, there are many stocks that have been bought over the past few trading days that are at or nearing levels of resistance that are not likely to be broken without additional positive fundamental news.
Nonetheless, since no levels of resistance of consequence have been broken, the short-term trend remains down and because of that reason this coming week is likely to offer opportunities to sell where the risk/reward ratios are highly positive and the probability ratings high. In most cases, though, the sell mentions given will require the stocks to rally early in the week to reach the desired entry points.
This week only sell mentions will be given, though last week's buy mention on KO remains in effect should the stock fall to the desired entry point level mentioned last week.
SALES
DD - Friday closing price 37.61
DD 7 weeks ago tested successfully the 200-week MA, currently at 39.70. The stock then proceeded to drop 19% in value over a period of 2 weeks, giving notice that a top had likely been found. Nonetheless, the stock had been in a strong up-trend prior to that fall and the drop in price did not include any retest of the highs. As such, this present rally the stock is seeing can be considered the needed retest of the highs before a downtrend can begin.
In October 2008, DD broke down from an established 8-year sideways trend between $40 and $50 to a 20-year low in price at $16. The subsequent rally seen over the past 15 months, from $16 to the recent 41.45 high (and 200-week MA), has only taken the stock back up to the $40 level that was previously strong support but now must be considered strong resistance. The probabilities of the stock going higher from these levels is small, especially considering that the 20-year low has not even had a minimal successful retest.
On a weekly closing basis, resistance is minor at 37.65, decent at the 200-week MA, currently at 39.70 and strong at the 33-month weekly high close at 40.22. On a daily closing basis, resistance is minor at 38.77 and decent to strong at 39.26. Major resistance is found at 40.95. On a weekly closing basis, support is very minor at 36.23 and decent to strong at 34.41. Below that level there is no support of consequence until strong support is reached down at 31.90 (100-week MA as well as multiple weekly closes in that area). On a daily closing basis, there is decent support at 36.23 and minor support at the 100-day MA, currently at 36.20. Below that level there is decent support at 35.08 and strong support at 34.09, and then nothing until the $32 level is reached.
DD did give a small short-term buy signal on Thursday when the stock was able to close above a previous daily high close at 36.79. This buy signal likely means the stock will see a bit more strength this coming week than other stocks. Nonetheless, the stock will start getting into decent to strong resistance starting between 38.40 and the 200-week MA up at 39.70. Since this is a rally that was somewhat expected to be seen at some time (previous highs being tested), the probability of much higher numbers being seen is very limited.
DD had a reversal week last week with lower lows, higher highs, and a close above the previous week's high. As such, follow through to the upside is expected to be seen this week. Nonetheless, resistance will start to be seen at 38.40 (minor), then at 39.05 (most probable objective) and then again at the 200-week MA at 39.70, and any rally to any of those levels would suffice as a retest of the highs on the weekly chart.
It must be mentioned that on the daily chart, the stock does show a successful retest of the highs with the rally seen from the May 6th low at 33.66 to the May 12th high at 39.35. As such, the 39.35 level must now be considered decent resistance and not likely to get broken. As far as support is concerned, there is none until the 200-day MA, currently at 34.65 is reached. This means that any failure here is likely to result in an immediate drop of $3-$4.
Sales of DD between 38.40 and 39.05 with a sensitive stop loss at 39.45, and an objective of 32.00, offers at least a 6-1 risk/reward ratio.
Rating on the trade is a 3.5 (on a scale of 1-5 with 5 being the highest). The trade does offer a very high 4.25 rating if the stop loss is placed above the 33-month high at 41.45.
MCD - Friday closing price 66.70
MCD had a reversal week this past week with lower lows, higher highs, and a close above the previous week's high. As such, follow through is expected to be seen. Nonetheless, the stock has not been acting all that strong in spite of the recent strength in the indexes as well as the recent all-time high made in May at 71.84. As such, the probabilities of that high being a top for the next few months, if not longer, continues to rise.
It must be mentioned that MCD has already tested the all-time weekly closing high at 71.15 successfully with a close at 69.56 5 weeks ago. It is therefore interesting to note that this week's high was 69.55, made on Friday, from which the stock was unable to close above even though the indexes ended up the day strongly. This action suggests the traders are very aware of that resistance level and the bulls were not able to generate a close above it on Friday.
On a weekly closing basis, resistance is minor to decent at 69.59 and strong at 71.15. On a daily closing basis, minor resistance is found at 70.14 and a bit stronger at 70.67. Strong resistance is found between 71.15 and 71.52. On a weekly closing basis, support is minor to decent at 65.67 and then only very minor supports every 50 points between 61.59 and 63.67. Below that, decent to strong support is seen at the 100-week MA, currently at 60.00. On a daily closing basis, support is minor at the 50-day MA, currently at 69.05. Below that there is decent support at 68.01 and then decent support again at the 100-day MA, currently at 66.85. Strong support is found between 66.01 and 66.70 and then nothing until the 200-day MA, currently at 63.40.
For a stock in a bull trend and trading near or at its all-time highs, MCD has not shown all that much strength over the past 8 weeks. It seems likely that the stock has found a mid-term top (3-6) months and that the top formation has been in the process of being built over the past few weeks.
Nonetheless, with the indexes looking to go slightly higher this coming week, it would not be surprising to see MCD trading up to and slightly above the $70 intra-week. The bulls were unable to generate a close above the successful retest close at 69.56 on Friday (high was 69.55), but intra-week that rule does not apply which means that it is very possible the stock will trade up to $70 this week. On a daily closing basis, though, there is resistance between 70.14 and 70.67 that should not get broken unless the indexes can establish themselves above the resistance levels mentioned. As such, a rally up to the $70 level offers an opportunity to sell that not only has a very good risk/reward ratio, but a high probability rating.
On the downside, the recent low weekly close at 66.70 is seen as good support, especially since it can be considered that close was a successful retest of the previous weekly high close at 65.67. Nonetheless, should that level get broken, there is little to no support until the $60/$62 level is reached. It must also be mentioned that the stock has held the 100-day MA, currently at 66.85, during the past couple of weeks but if broken there is no support whatsoever until the 200-day MA, currently at 63.40 is reached.
Sales of MCD between 70.10 and 70.60 and using a stop loss at 71.94 and having an objective of 60.00, offers a risk/reward ratio of 5-1.
My rating on the trade is a 3.5 (on a scale of 1-5 with 5 being the highest).
TRV - Friday closing price 50.41
TRV has so far been successful in maintaining itself above the 200-week MA, currently at 47.95. Twice during the past 3 weeks the stock got down to and slightly below the line but on a weekly closing basis was able to maintain itself above it. Nonetheless, the stock has tested the line on 7 different occasions and the repeated attempts are likely to be successful at some point, as long as the indexes remain under selling pressure.
On a negative note, though, the stock broke below the 200-day MA, currently at 50.70, 5 weeks ago and has not been able to negate the break or trade above that line on a daily closing basis, during the same period of time. Nonetheless, the stock is presently heading back up to the line due to the strength seen in the indexes on Thursday and Friday, and that opens up the possibility of a sell position with a good risk/reward ratio and high probability rating being instituted once more.
On a weekly closing basis, resistance is decent at 50.76, minor to decent between 51.30/51.40, and decent again at 52.06. Above that level strong resistance is found at 53.38 and major at 54.35. On a daily closing basis, resistance is decent at 50.70 (200-day MA), decent again at 51.40 (100-day MA) and strong at 53.79. On a weekly closing basis, support is minor to decent at 48.61, decent to strong at 48.10, and decent at 47.37. Below that level, there is no support of consequence until 45.00 is reached. On a daily closing basis, there is minor support at 49.26 and then very strong support between 47.94 and 48.30.
TRV continues to be a very conservative stock that generally trades in clearly defined $3-$5 trading ranges. Nonetheless, the stock has now tested the 200-week MA on 7 different occasions since August of last year and so many repeated attempts have increased the probabilities of a break of support that could generate a strong move down.
In the meantime, the stock is back up near the 200-day MA, currently at 50.70, that has been a brick wall over the past 5 weeks. In addition, the 50-day MA is currently at the same price and that will increase the strength of resistance at that level.
TRV has generated a strong $3 move straight up from the recent lows after the stock built a double bottom on the intra-day chart at 47.69/47.77, in addition to the once again successful retest of the 200-week MA. As such, no support has been built that would stop the fall should the stock reach a resistance that holds. Such a scenario offers a very good risk/reward ratio with a good probability rating, as well as a possible fast resolution.
Sales of TRV between 50.65 and 51.15 and using a stop loss at 51.45 and having an objective of 47.90, offers a risk/reward ratio of 5-1.
My rating on the trade is a 3.5 (on a scale of 1-5 with 5 being the highest).
MSFT Friday closing price - 25.66
MSFT has taken a sharp tumble in price since building a double top on the weekly chart up at 31.50/31.58. In addition, a strong sell signal was given on the same chart 4 weeks ago when the stock closed below 27.93. This sell signal was followed up with a break of the 200-week MA 3 weeks ago that has now been confirmed with a second close below the line. Simply stated, all bearish signs.
MSFT did find some support at the 100-week MA, currently at 24.50, having dropped down to that price twice over the past 3 weeks and having held, and is now generating a rally, likely back up to the 200-week MA, to retest that break as well as get rid of some of the oversold condition the stock is presently seeing.
On a weekly closing basis, resistance is decent at the 200-week MA, currently at 27.10. Above that level, there is decent resistance between 27.40 and the previous low close at 27.93. On a daily closing basis, there is minor resistance at 26.00 and strong at 26.86. Above that level, there is no resistance until the 200-day MA, currently at 28.40, is reached. On a weekly closing basis, support is minor to decent between 25.00 and 25.25 from a couple of previous weekly closes at that price as well as from the psychological support at $25. Below that level, support is decent at the 100-week MA, currently at 24.50. Below that level there is no support of consequence until the psychological support at $20 is reached.
MSFT has been looking very weak having dropped $7 in price over the past 8 weeks and totally negating the previous up-trend the stock had enjoyed. The stock is presently trading between the 100 and 200 week MA's but does show a very evident inverted flag formation on the weekly chart that gives a $20 objective should the bottom of the flag at 24.50 be broken.
Having broken and confirmed the break of the 200-week MA, that line will now become strong resistance and without outside help, like from the indexes, it is unlikely the stock will be able to get above that line. The stock did close on the highs of the week on Friday and follow through is expected, with the 200-week MA as the objective. Nonetheless, that is still almost $1.50 higher than Friday's close and therefore the hardest thing about this trade will be achieving the desired entry point into a short trade.
The probability rating on this trade is high but the risk/reward ratio is very cloudy. The probabilities favor the stock continuing to trade between the 100-week MA at 24.50 and the 200-week MA at 27.00. As such, the risk/reward ratio within that trading range is not great. By the same token, definite possibilities exist that if the indexes break down from these levels that MSFT will break support, as well as the inverted flag formation, and head down to the $20, thus making the risk/reward ratio very attractive.
Sales of MSFT between 26.61 and 26.93 and using a stop loss at 27.76 and having an objective of 24.50 offers a risk/reward ratio of 2-1. Nonetheless, if the stock breaks below 24.50, drops down to 20.00 will likely occur, increasing the risk/reward ratio to 6-1.
My rating on the trade is a 4.25 (on a scale of 1-5 with 5 being the highest).
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Updates
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| Updates on Held Stocks
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Closed Trades, Open Positions and Stop Loss Changes
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| NUAN had a totally uneventful week trading within support at 15.50 and resistance at 17.00. Due to the close near the highs of the week, it is expected the stock will have a higher high than last week, but not substantially enough to generate any new buying. By the same token, last week's lows should be safe this coming week. Possible trading range for the week is 17.32 to 15.81. GPS generated a successful retest of the 50-week MA, currently at 20.95, with a green close on Friday. Such a successful retest suggests that a rally up to the decent to strong resistance level on the weekly closing chart between 22.96 and 23.03 will be seen. Nonetheless, the stock does show decent resistance at the 100-day MA, currently at 22.25 and it is probable that level will be an important pivot point this week. Stops should be maintained at 22.36 as there is absolutely no resistance on the chart until 23.36 is reached. Nonetheless, at 23.36 the stock is once more a strong sell so a decision whether to stay in for that rally or get out and get back in should be made. By the same token, if Friday's low at 21.65 is taken out, drops down to 20.94 will likely occur and the chance for a rally upward would likely dissipate. KGC once again showed last week's close at 16.85 to be a successful retest of the 200-week MA with Friday green close. In addition, the stock also gave a small buy signal closing above the most recent high weekly close at 17.21. On a weekly closing basis, there is decent resistance at the 100-week MA, currently at 17.65. That level also shows several previous weekly low closes at that price giving the level added resistance strength. Nonetheless, on the intra-week chart, little resistance is found until 18.85 is reached. On the daily chart, there is decent resistance between 17.76 and 17.85 where the 50 and 100 day MA's are both currently found. By the same token, if the stock is able to get above that level intra-week, there is no resistance of consequence until 18.85. Probability favors the upside due to the repeated successful retests of support, the new highs made in Gold, as well as the ability of the indexes to prevent a collapse in price. On a daily closing basis, support should now be considered strong and important at 16.81/16.85. BEXP was able to close on Friday above a minor to decent weekly close resistance level at 17.54 and now only shows minor weekly close resistance at 18.57 before the major resistance at 19.51 is reached. Nonetheless, this rally was to be expected as the all-time high weekly close at 19.51 had to be retested on the weekly chart before any concerted action to the downside could be seen. On the daily chart, though, the all-time high has already been tested successfully on 2 occasions and if the stock is able to close above the most recent high daily close at 18.48 (18.57 on an intra-day basis), new buying will likely come in. As such, the 18.48/18.57 level should be defended strongly by the bears. The stop loss at 18.11 should be cancelled as the close near the highs on Friday suggests that a rally up to at least 18.30-18.40 will occur on Monday. Nonetheless, without the stock getting above 18.57, the downside still looks the most probable. A drop below Friday's low at 17.27 will likely generate new selling. Stops should now be placed at 18.67. CAL ended up having a very bullish close on Friday not only closing above the 200-week MA, currently at 23.10, but also breaking the double top on the weekly closing chart at 23.04/22.98. Such action suggests further upside is to come. By the same token, any failure to follow through at this stage would be received negatively and likely generate strong movement downward. The stock still shows intra-week resistance at 24.29 as well as some minor resistance at 23.64, so follow through to the upside is still not guaranteed. In addition, on the daily closing chart, the new 30-month weekly closing high was not confirmed as the daily chart still shows a 30-month daily high close at 23.77. Nonetheless, it is evident that this week is going to be critical to the stock, both to the bulls and the bears, as the bulls are now forced to generate further upside or face a very negative failure to follow through signal. The stock did have a reversal day on Friday with lower lows, higher highs, and a close above the previous day's high. As such, probabilities strong favor the bulls. Any daily close above 23.77 should result in liquidation of the short positions. SOHU did not accomplish anything of consequence this week, keeping itself above the lowest weekly closing price since March of last year at 43.23 but below last week's close at 44.27. The chart continues to look strongly bearish and in spite of the rally and positive close in the indexes, as well as in several stocks, the best the stock could do was a defensive move keeping itself from continuing the downtrend this past week. Nonetheless, if the indexes do rally the stock still shows a potential rally up to a daily close at 45.16. That level is now considered a decent daily close resistance. Support this week, on a daily closing basis, is likely to be 43.09 and therefore the probabilities of a trading range between 43.09 and 45.16, based on daily closes, is high. ATI continues to show a definite downtrend on the daily closing chart with lower high closes and lower low closes. Nonetheless, the last daily high close is at 55.08, so there is room to the upside for further upside. On the weekly closing chart the story is the same but there is a minor weekly close resistance at 53.70 that will likely stop any rally if the indexes don't break out. On an intra-week basis, the stock does show a decent to strong resistance at 53.39 that looks difficult to break. The 50-day MA is currently at 52.85 and that line could also be difficult to overcome. Nonetheless, having closed on Friday at 51.95, it seems highly likely that some follow through to the upside will be seen on Monday and Tuesday. Though it is likely the stock will move up at least $1 this coming week, the stock continues to show an open gap between 47.79 and 48.21 that is likely to get closed soon. As such, the risk/reward ratio at these levels continues to favor the bears. I will be looking to add shorts between 52.80 and 53.35. Stop loss should now be raised to 53.44. HPQ continues to show a very bearish formation but having closed on its weekly highs on Friday, some follow through to the upside is expected to be seen. Rallies up to the 50-week MA, currently at 48.10 are possible. Nonetheless, on the daily closing chart, there is decent to strong resistance at 47.48 that if broken, shows that a rally up to the 200-day MA, currently at 49.50 could occur. As such, any close 10 points or more above 47.48 should cause liquidation of the short positions. The probabilities continue to favor the downside and there is a good possibility that even if the indexes rally a bit on Monday that the stock will close in the red. A red close on Monday would mean a successful retest of the 47.48 resistance and likely bring in a new rash of selling.
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1) GPS - Shorted at 22.95. Averaged short at 24.17 (3 mentions). Stop loss now at 22.36. Stock closed on Friday at 21.99.
2) AMZN - Shorted at 121.83. Covered short at 122.59. Loss on the trade of $76 per 100 shares plus commissions.
3) MCD - Shorted at 66.86 and at 67.91. Covered shorts at 68.35. Loss on the trade of $193 per 100 shares (2 mentions) plus commissions.
4) SKX - Shorted at 39.73. Covered at 40.28. Loss on the trade of $55 per 100 shares plus commissions.
5) CAL - Shorted at 22.93. Averaged short at 23.125. Stop loss at 24.39. Stock closed on Friday at 23.57.
6) BEXP - Shorted at 16.91 and again at 17.61. Averaged short at 17.456 (3 mentions. No stop loss at present. Stock closed on Friday at 17.93.
7) TXN - Covered short at 23.85. Shorted at 24.69. Profit on the trade of $84 per 100 shares minus commissions.
8) SOHU - Shorted at 43.55. Averaged short at 44.443. Stop loss at 46.46. Stock closed on Friday at 43.82.
9) AA - Covered short at 10.73. Shorted at 13.49. Profit on the trade of $276 per 100 shares minus commissions.
10) KGC - Purchased at 16.80. Stop loss at 16.03. Stock closed on Friday at 17.46.
11) IR - Covered shorts at 36.23. Averaged short at 37.69. Profit on the trade of $292 per 100 shares (2 mentions) minus commissions.
12) AMZN - Covered short at 116.33. Shorted at 129.10. Profit on the trade of $1277 per 100 shares minus commissions.
13) ATI - Shorted at 51.20. Covered short at 51.85. Loss on the trade of $65 per 100 shares plus commissions.
14) ATI - Shorted at 51.56. No stop loss at present. Stock closed on Friday at 51.95.
15) MCD - Shorted at 69.01. Covered short at 69.53. Loss on the trade of $52 per 100 shares plus commissions.
16) HPQ - Shorted at 46.23. Stop loss at 48.38. Stock closed on Friday at 47.19.
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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. |
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