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Issue #181 
June 27, 2010 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Reversal Week Seen in the Indexes. Further Downside Expected!
DOW Friday closing price - 10143
After following through to the upside on last week's late rally, the DOW was unable to maintain its upside momentum and ended up having a classic negative reversal week with higher highs, lower lows, and a close below last week's close. The action suggests that a successful retest of the highs has now been accomplished and that a downtrend has begun.
In addition, the DOW negated the break above the 200-day MA that happened 2 weeks ago, closing below the line on Tuesday and confirming the break with 3 subsequent lower closes. The index was able to prevent breaking down on Friday and testing the decent to strong weekly closing support at 10012 because of the positive fundamental news that came out on Friday morning stating that the House and the Senate had agreed on a plan that would prevent the banks and financial institutions from continuing some of the trading practices that aided to the dramatic drop in stock prices seen in 2008/2009. That news gave the market a respite from the selling on Friday.
On a weekly closing basis, decent resistance is found at 10451, decent again at 10618 and strong at 11204. On a daily closing basis, there is decent resistance at 10255, minor at 10360, and strong at 10451. Above that level, there is decent resistance again at 10545 from a previous daily high close. 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 decent at the demilitarized zone between 997 and 10030 and strong at 9816. Below that level there are minor supports at 9713, at 9488 and again at 9218.
In spite of the positive news on Friday, the DOW remains in a short-term bearish pattern with a retest of the lows made 2 weeks ago at 9758 being the immediate objective. On an intra-week basis, there is decent to strong support between 9835 and 9870. Reaching those levels intra-week would fulfill the need for a retest of the lows, leaving the final answer as to whether the market is now in a downtrend or simply in a sideways trading range, to be made when earnings begin to come out. On a weekly closing basis, though, the 9932/10012 level offers good support and though a lower close is likely to be seen next Friday it is not likely the index will generate a weekly close below that level until the earnings report quarter starts.
The biggest problem the bulls have at this time is that a sell signal has been given on the weekly closing chart and all rallies are likely to be sold until such a time the bulls can show some fundamental reason for the market to go up, or that the downtrend now in effect is over. This will be difficult to achieve because this last move up ended up being a successful retest of the highs on all charts and the probabilities favor lower lows than the previous ones being achieved. As such, the burden of proof is totally on the shoulders of the bulls.
To the upside, the 200-day MA (currently at 10360) is once again likely to stop any intra-week rallies. By the same token, the previous daily close double top at 10254/10259 is going to act as very strong resistance even if intra-week rallies up to 10360 are seen. This means it is unlikely that on a daily closing basis the DOW will be up more than 110 points from Friday's close, any day this week.
Last week's trading range was 513 points. Looking at resistance being the 200-day MA (currently at 10360) and support being 9835 to 9870, it seems likely the same size trading range will be seen this coming week with 10360 being the possible high and 9847 being the possible low. Based on the action on Friday, it is probable the upside will be seen first. Nonetheless, expect volatility to continue to be seen this week with a "general" trading range of 300 points above and below the pivot point of 10,000, with this to happen over the next 2-3 weeks.
NASDAQ Friday closing price - 2223
The NASDAQ has pivoted around the 200-week MA (currently at 2221) during the past 6 weeks with 3 rallies up to 140 points above the line and 3 drops up to 80 points below the line, generating a total of 3 closes within 10 points of the line during this period of time. It is very evident that the 200-week MA will determine the trend for the next 3-6 months once that decision is made.
Nonetheless, it must be mentioned that the probabilities continue to increase every week the index stays around the 200-week MA that the decision will be to the downside as the index was in a strong uptrend previously and has now had 3 opportunities to re-generate that uptrend and they have all failed.
On a weekly closing basis, very minor resistance is found at 2257. Strong resistance is now found at 2310/2317. Above that level there is only minor resistance at 2347 and then nothing until 2530. On a daily closing basis, there is minor resistance at 2252, minor to decent at 2278 and strong at 2303, as well as at 2320. On a weekly closing basis, support is strong at 2219 and decent to strong at 2141. Below that level, there is 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 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.
The NASDAQ has been unable to close below the 200-week MA over the past 8 weeks in spite of 4 intra-week drops, with as much as 80 points, below the line. By the same token, the past 2 weeks the index was able to trade above a decent to strong intra-week resistance at 2326 but was not able to close above the weekly close resistance at 2317, suggesting that the rallies have no strength.
A Head & Shoulders formation is now complete on the weekly closing chart, with the left shoulder at 2317, the head at 2530, and the right shoulder at 2310. The neckline is at 2219, which is also where the 200-week MA is currently located. As such, any close below 2219, on a weekly closing basis, will give an objective of 1999/2000. The NASDAQ has continued to be the index to follow because of the very important and clearly defined chart levels shown.
The NASDAQ also had a classic reversal week this past week with higher highs, lower lows, and a close below the previous week's low at 2244. As such, the index is likely to be under strong selling pressure this coming week with the bulls totally on the defensive after failing to generate any follow through to the upside last Monday when the index got above the previous week's high as well as above the previous resistance at 2326 once again.
As with the DOW, the 200-day MA, currently at 2252, will likely be strong resistance this week. Having closed in the green on Friday the bulls are likely take this opportunity to generate some buying Monday in the hopes they can get the index above the 200-day MA and relieve some of the selling pressure that has been brought to bear with all the recent failures.
It must be mentioned that a break of the 200-week MA will be a very strong indication that the indexes are in a downtrend of consequence. During the entire rally of the last 15 months, the other 2 indexes were only able to get "up to" the 200-week MA, whereas the NASDAQ has been trading above the line since December. As such, it can be said the NASDAQ has been the main "indicator" of the trend for the last 15 months. A break of the 200-week MA will be a major sign that the uptrend is totally over.
On an intra-week basis, the NASDAQ shows decent support between 2166 and 2188. A drop down to that level is highly likely to be seen this coming week, as a possible retest of the recent low and double bottom at 2139/2141. Nonetheless, if that support level does not hold and the index drops back down to the double bottom support at 2139/2141, it will make it into a triple bottom and those are usually broken, putting the index in a situation where closing above the 200-week MA would be difficult to accomplish. As such, it is important for the bulls to defend the 2166/2186 level.
It is possible that a close below the 200-week MA could occur this week but not be confirmed the following week. All breaks of support always need confirmation, and with the earnings report quarter starting July 12th, it can be visualized that for the next couple of weeks the index could flip-flop above and below the 200-week MA without giving a confirmation that the line has been broken. Nonetheless, such a scenario would certainly put the bulls in a negative situation "needing" positive fundamental news to invalidate the break. Possible trading range this week is 2352 to 2166.
SPX Friday closing price - 1076
The SPX, like the other indexes, also had a reversal week with higher highs, lower lows and a close below the previous week's close. Nonetheless, the action in the index was even more bearish than it was in the other indexes inasmuch as the index found itself trading last Friday and Monday is an area (1131) where there was absolutely no previous resistance, and yet the index was unable to go higher.
By the same token, the SPX did close in the green on Friday, making Thursday's close at 1174 into a likely successful retest of the support level at 1068/1071 and suggesting that a rally back up to the 1100-1104 will be the first course of action at the beginning of the week.
On a weekly closing basis, decent resistance is now found at 1118. Above that level there is minor resistance at 1136 and strong resistance at 1145. On a daily closing basis, resistance is decent at 1103 and strong at 1118. Above that level there is decent to strong resistance between 1147 and 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, support is decent at 1068/1071 and decent to strong at 1050. Below that level, decent support is found at 1025 and decent to strong support at 994.
The SPX continues to under perform the other indexes due to the continuing worries about financial problems worldwide. It is important to note that of the 3 indexes, the SPX is the one closest to pivotal supports at 1068/1071 and important supports at 1040/1050. As such, if there is any weakness in the indexes it is likely that it will first be seen in the SPX.
Nonetheless, the index did close in the green on Friday and since the break above the 200-day MA, and subsequent break below that line last week, the recent daily high close at 1118 has not yet been tested successfully. It must be mentioned that prior to the recent breakout the SPX was showing a very strong double top at 1103 and it is likely that resistance will be strong again now. A move up to that level seems likely to be seen, and perhaps as early as this week.
The SPX also had a classic reversal week this past week and therefore the probabilities of seeing lower lows that last week (1068) is high. Nonetheless, it seems probable that like with the other indexes, the upside will be seen first. Possible trading range for the week is 1106 to 1050.
All indexes had a classic reversal week this past week and follow through to the downside is highly likely to be seen at some point this coming week. By the same token, on Friday the bulls were able to generate some short-covering that put the indexes on an "even keel" for the first couple of days of the week, suggesting that some upside movement could be seen early in the week.
Nonetheless, this is an important week as far as economic reports are concerned, with Personal Income and Spending due out Monday, The Case Schiller 20-city Index as well as Consumer Confidence due out on Tuesday, Chicago PMI and ADP Employment Change due out on Wednesday, the always important ISM index, as well as Initial Claims and Car sales due out on Thursday, and the big Unemployment Number due on Friday. As such, this week is more likely to pivot on news than on technical trading, as last week was.
It is not expected that any of these reports will be positive enough to stop some of the negative momentum the bears gained this week, but it is expected that volatility will rule this week. The charts suggest that both green and red will be seen often throughout the week but a negative bias is probable.
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Stock Analysis/Evaluation
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CHART Outlooks
A lot of volatility is expected to be seen this week with wide swings both to the upside and downside likely. Nonetheless, the successful retest of the highs, the classic reversal week in all the indexes, as well as the overall lack of fundamental reasons to be an aggressive buyer, suggest that selling rallies is the best way to go.
Mentions this week will be limited but they will all be sales. Nonetheless, in most cases the stocks mentioned will have to generate a rally in order to reach desired entry points.
The buy mention in KO given 3 weeks ago to purchase the stock between 49.44 and 50.00, using a stop loss at 48.22 and having an objective of at least $55, is still viable. If the indexes do reach the lower levels mentioned above, the probabilities of the stock getting down to that price will be high.
SALES
AXP - Friday closing price 42.67
AXP seems to be in the process of building a Head & Shoulders formation with the left shoulder being the high seen January 20th at 43.25, the head being the high seen on April 23rd at 49.19 and the right shoulder perhaps being the high seen last Monday at 43.14. The neckline is the line drawn between the low seen February 5th at 36.60 and the low seen June 8th at 37.13. A break of the neckline would offer an objective of a drop down to at least 31.08.
The Head & Shoulders formation is not yet complete, at least not on the weekly chart, as the stock would need to keep away from this past week's high at 43.14 and go below last week's low at 40.94. Based on the close at the highs of the day, as well as near the highs for the week on Friday, the right shoulder at 43.14 is still very much in doubt.
On a weekly closing basis, resistance is decent at the 200-week MA, currently at 42.60 and then nothing until the 26-month high weekly close at 48.05. On a daily closing basis, resistance is decent at 42.60 and decent again at 42.98. Above that level decent resistance is found at 44.10 and then nothing until strong resistance is found between 46.67 and 48.05. On a weekly closing basis, support is minor at 41.10 and then again at 39.66. Below that level there is decent to strong support at 38.41 and then again at 37.66. Below that level there is minor support at 36.62 and then nothing of consequence until 31.07. On a daily closing basis, there is decent support at 41.06 and then nothing of consequence until the 200-day MA, currently at 39.70. Below that level, there is strong support at 37.71 and decent at 36.79.
In addition to the left shoulder of the H&S formation at 43.25, AXP shows the 200-week MA, currently at 42.65, as another strong resistance level factor that the bulls must contend with. Nonetheless, having closed on Friday right on the line and on the highs of the day, as well as near the highs of the week, some follow through to the upside should be expected. As such, it is likely that in the first couple of days of the week, much could be decided with the stock, at least on a chart basis.
Evidently a drop below last week's low at 40.94 would be a clear indication that the stock has built the formation and further upside would then be unlikely. Nonetheless, should the stock get above 43.25 many questions as to the short-term upside objective will arise, especially since there is very little resistance until the previous high at 49.19 is reached. Either way, though, the chart suggests that the stock has topped out with the 49.19 high and only the "small" details as to where the right shoulder is or how high the retest of the high will be, is left to be decided.
Sales of AXP between Friday's closing price at 42.67 and up to 43.00 and using a stop loss at 43.35 and having a short-term objective of 37.36 offers a risk/reward ratio of 8-1.
Rating on the trade is 3.25 (on a scale of 1-5 with 5 being the highest).
YHOO Friday closing price - 14.80
Since May of last year YHOO has traded above the $15 level 88% of the time. Nonetheless, the stock has been unable to generate any rally of consequence above $18 and continues to drop consistently back down to the $15. The repeated retests of the $15 area on the weekly closing chart (now 6) has now increased the probabilities of the stock breaking below that pivot point and trading lower for the next year.
In addition, just 11 weeks ago, YHOO broke above a 17-month high at 17.94 with a rally up to 19.12, and yet the stock failed to follow through on that breakout and gave a failure-to-follow-through signal just 2 weeks after the breakout. The failure to follow through signal has continued to gather momentum and now the stock has closed below $15 (14.81 on Friday) giving notice that further downside is probable.
On a weekly closing basis, resistance is minor at 15.54, decent at the 16.49, and strong between 17.22 and 17.48. Above that level, major resistance is found at 18.17. On a daily closing basis, there is very minor resistance at 15.22 and decent to strong resistance at 15.65/15.69. Above that level there is decent resistance at the 100 and 200 day MA's which are at 16.10 and 16.20 respectively. On a weekly closing basis, support is minor to decent between 14.32 and 14.50. Below that there are no supports of consequence until 13.15 and 12.14 are reached. On a daily closing basis, there is decent support at 14.69 and decent to strong support is found between 14.18 and 14.38. Below that level there is no support whatsoever until the $12- $13 level is reached.
In March of this year, YHOO broke above the 100-week MA, currently at 15.20, and had been able to maintain itself above that line until 6 weeks ago when the stock once again began trading below the line. Two weeks ago, the stock was able to get above and close above the line, but it was just temporary as last Friday the stock closed below the line once again and now looks like it wants to continue downward.
Seeing how the stock for the last 13 months has traded up $3 to as much as $4 above the $15 pivot point, it seems natural to assume the same kind of action will be seen to the downside if the bears are able to build a beachhead below the $15 level.
During the past 24 trading days (1 month) the stock has been unable to generate any kind of a rally above 15.90 in spite of the fact the stock has moved up to 15.84 on two separate occasions, with the most recent being last Monday when the indexes had a strong opening day. It can also be said, when looking at the weekly chart, that the stock is showing a probable inverted flag formation with the flagpole being the high seen 9 weeks ago at 19.12 and the low seen 4 weeks ago at 14.63. The flag would be the trading range between 15.90 and Friday's low at 14.57. A break of the bottom of the flag would actually give a downside objective of 11.38.
Due to the close on Friday below $15 as well as the clearly evident resistance level between 15.84 and 15.90, the stock seems to be a very good short at this time offering a clearly defined risk/reward ratio as well as a probable downside objective.
Sales of YHOO between 15.35 and 15.69 and using a stop loss at 15.94 and having an objective of 13.00 offers a risk/reward ratio of 4-1.
My rating on the trade is 3.75 (on a scale of 1-5 with 5 being the highest).
LINE - Friday closing price 26.11
LINE has now successfully tested the 32-month weekly closing high, made the second week of January at 28.25, 3 times with high weekly closes at 27.23, 27.10, and the close 2 weeks ago at 26.19. In addition, the stock generated a negative reversal week last week with higher highs, lower lows, and a close in the red, suggesting that further upside will now be difficult to accomplish.
LINE gave a sell signal on the weekly closing chart the first week of May, coinciding with the Elliot Wave prediction that a top to the index rally had been found. Nonetheless, the sell signal was negated 4 weeks ago when the stock closed above the broken sell signal support level at 25.17. As such, the last 4 weeks the stock has shown some technical strength as the bears had to wait until a new sign was given that the stock could not go any further to the upside. Such a signal might have been given on Friday when the stock closed in the red for the first time in the last 6 weeks.
On a weekly closing basis, resistance is minor at 26.17, decent at 27.10 and again at 27.23. Strong resistance is found at 28.15. On a daily closing basis, resistance is decent at 26.46 and strong at 27.18. Above that level, strong resistance is found at 27.75 and major at 28.80. On a weekly closing basis, support is decent to strong between 24.80 and 25.17. Below that level, minor support from the 200-week MA is found at 24.40 and strong support at 23.00. Below that level there is no support until the 100-week MA, currently at 20.60 is reached. On a daily closing basis, support is minor at 25.79 and then decent to strong between 24.80 and 25.00. Below that level support is decent at 23.69 and strong at 22.69.
After the second successful retest of the highs, LINE dropped and left an open gap between 26.65 and 25.74 that was not closed until last Monday's rally in the index. The gap was not generated by any news and therefore the probabilities of the gap getting closed were very high. As such, with the strength seen in the indexes at the end of the week 2 weeks ago, as well as the strength seen last Monday, the gap was closed. Nonetheless, the stock has been unable to make any further gains and has begun to fall back.
LINE now shows an open gap below between 22.74 and 23.10 that will begin to work as a magnet if the recent high at 26.67 is not broken. The stock has been able to stay above the 200-day MA, currently at 25.55, for the past 3 weeks but did test the line on Thursday. It is evident, though, that LINE is not presently in a selling pressure situation due to the ability of the bulls to negate the sell signal given 8 weeks ago. By the same token, the stock is at price levels that are attractive to sell with very low and clearly defined risk/reward ratios as well as a decent to good probability rating.
On the downside, the stock did get down to 21.42 just 6 weeks ago and that low has not yet been tested successfully. As such, if the stock starts showing some weakness this week and the 200-day MA is broken, drops down to at least 22.40 are likely to be seen.
Sales of LINE between Friday's closing price at 26.11 and 26.50 and using a stop loss at 26.79 and having an objective of 22.40, offers a risk/reward ratio of 5-1.
My rating on the trade is a 3.25 (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 fulfilled the trading range mentioned last week with the stock testing the resistance at 17.70 with a high this week at 17.67 as well as the downside objective of 16.40 with a drop down to 16.26. Based on what the indexes are likely to do this week, it is possible the stock will go back up to what is now again decent to strong resistance at 16.98/17.00 as well as drop down to the 200-day MA, currently at 15.20. The probabilities favor the upside being seen first. Nonetheless, the probabilities of the stock getting back down to the very strong support level at $15 sometime this week are high. GPS closed down very close to a strong psychological support level at $20. Nonetheless, the stock was able to close below the 50-week MA, currently at 21.20 for the first time since March 2009. A break of that line is likely to bring in new selling on any rally this week. The 50-week MA will be strong resistance this coming week. On the downside, though the $20 level is good psychological support, the reality is that there is very little previous support at that level. The closest weekly closing support is down at 18.86 and on an intra-week basis it must also be mentioned that there is no strong support until the 200 and 100 week MA's are reached, currently at 18.40 and 18.00 respectively. As such, it is possible this week a trading range between 21.20 and 18.60 will be seen. AXP (see mention above). SOHU once again made a new 15-month low weekly close on Friday keeping the downtrend intact. In addition, the stock has a major classic reversal with higher highs, lower lows and a close below last week's low at 43.02. Such a chart scenario suggests strong follow through to the downside at some point this week, especially since the closest daily close support is at 40.10 and the closest weekly close support is at 39.35. The stock still shows an intra-week support from May 25th at 41.02 that may stop the decline at the beginning of the week if the indexes rally. Nonetheless, the probabilities are low that any rally will take the stock higher than 42.49/43.06 on a daily closing basis. Probabilities are now very high that at least a print of 40.00 will be seen before the end of the week. ATI now shows 3 successful retests of the 58.25 high seen the week of April 26th with a rally up to 58.00, up to 55.89, and up to the previous week's high of 55.09. As such, the probabilities strongly favor the downside at this time. Nonetheless, it must be mentioned that during the last 9 weeks the stock has been like a yo-yo between the high and the 9-week low at 45.30, with the $50 level being the main pivot point. The stock did close on Friday at 50.21 and it is once again likely that level will be a pivot point this week with rallies when the indexes rally and drops when indexes drop. There are 3 levels of resistance above with the first being the 100-day MA at 50.60, the second being the 50-day MA at 52.20 and the third being a major high seen on January 11th at 53.39. To the downside, the stock continues to show an open gap between 47.79 and 48.21 that has a very high probability of being closed at some point this week. Below that there is a very strong daily close support area between 46.51 and 46.89, and below that the 200-day MA, currently at 44.20. As such, it is possible the stock could trade as high as 53.39 and as low as 44.20. Stops should be lowered to 53.49. HPQ closed on Friday below the lowest weekly close at 46.01 since the last week of September 2009. There is a decent (but not strong) support on the weekly closing chart between 44.96 and 45.28 that is going to be difficult to break but is likely to be seen as a close next Friday. On the same weekly closing chart, the 47.98 level is now considered decent to strong resistance and unlikely to get broken unless the indexes generate a strong rally. The stock does show decent support on the daily closing chart between 45.24 and 45.69 and with Thursday's close at 45.89 it is possible to anticipate an early week rally upwards with an objective of closing between 47.03 and 47.48. Nonetheless, after accomplishing such a rally, the probabilities favor the stock dropping the rest of the week and closing next Friday around the 45.00 level. The stock is showing a strongly bearish chart formation that ultimately should push the stock down, on a weekly closing basis, to at least 43.75 with 41.59 being a definite possibility. AMZN did close below the lowest close since the week of March 1st at 122.77 seen just 3 weeks ago. Nonetheless, the bulls were able to generate a bit of buying on Friday closing the stock above the decent support between 117.39 and 119.66. On a positive note, the stock did get down to the 50-day MA, currently at 116.80, for the second time in the last 14 months, holding itself above the line one more time. Such a likely successful retest is probably going to generate a rally up to the 200-day MA, currently at 123.40 or perhaps up to a decent resistance level up at 125.68. By the same token, if the scenario I visualize in the indexes occurs, there is a decent possibility that by the end of the week the stock will get down and break the 50-day MA and put the stock at risk of breaking below the strong 10-year pivot point level at 113.00/113.82.Like with the indexes, expect some strength early in the week and weakness late in the week. If the 200-day MA, currently at 123.40 is not broken to the upside, the stock could show more weakness than the indexes would show. MCD got down to a very decent to strong intra-week support level at 67.42/67.50 with a drop this past week to 67.37. At that same level the 100-day MA is presently located and that line has held firm since it was broken conclusively back in September. As such, that line has to be considered a very decent to perhaps strong support level. The stock did close on the lows of the day and needs a green opening on Monday to prevent the level from breaking. If that happens, there is no resistance whatsoever until the 50-day MA is reached, currently up at 69.25, and even then that is only considered a minor resistance. Nonetheless, the stock did generate a successful retest of the high weekly close at 71.15, with the previous week's close at 69.88 and a red close on Friday, so the stock now has more probabilities of going lower than higher. By the same token, if the stock does close in the green on Monday, a rally back up to 69.25-69.70 is likely to occur. As such, if that looks like it is going to happen, you could take profits around 67.70 and re-short on a rally above 69.25. The main mid-term downside objective continues to be $60. TRW successfully tested the high weekly close at 34.46 with a close the previous week at 32.66 and a red close on Friday. Nonetheless, the stock has not given a sell signal on the weekly closing chart nor a convincing sell signal on the daily closing chart. As such, the stock seems to be waiting for something of consequence to happen elsewhere before deciding what it wants to do. The $30 continues to be a major pivot point for the stock and with Friday's close at 30.54, Thursday's close at 30.24 can be considered a short-term successful retest of that area. There is decent daily close resistance at 31.57 (32.06 intra-week) but it is probable the stock is heading back up to that level at some point this week. Support is decent at the 100-day MA, currently at 29.20, so without a strong move down in the indexes, it is likely that level will hold. Based on this chart formation it would not be a bad idea to take profits on the short on Monday if able to get a print around 30.00 to 30.24 and re-short the stock up around 32.00. As it is, this chart is not as bearish as charts in other stocks are. DD had a classic reversal week just like the indexes did and follow through to the downside is expected to be seen at some point this coming week. A drop down to the 50-week MA, currently at 34.20, would be the week's objective. By the same token, the stock was able to close on Friday exactly at the 100-day MA, currently at 36.65 and if the indexes rally at the beginning of the week (likely) the stock is likely to move back up to at least the 50-day MA, currently at 37.00, or even up to a previous intra-week high at 38.58 if the 50-day MA is broken. By the same token, by the end of the week the stock should break below the 100-day MA, and drop down to at least 35.00 where the 200-day MA is currently located. KGC had left a possible breakaway and runaway gap formation 2 weeks ago but when the stock showed an inability to break or even get up to the 200-day MA, currently at 18.95, the sellers came in and the stock closed both of those gaps this past week. By the same token, the stock was able to hold itself above both the 50 and 100 day MA's on that drop and now seems to be waiting for direction before attempting any action of consequence. It is highly probable the stock will trade this coming week between $18 and $19. Nonetheless, such a trading range means absolutely nothing. Nonetheless, the week's low at 17.71 can now be considered decent support and stop loss orders should now be raised to 17.61 as a break of that support is likely to take the stock back down to the 16.75 level. VCLK confirmed that the previous week's close at 12.08 was a successful retest of the strong Jun09 resistance at 12.17. As such, profit taking of some consequence was seen, taking the stock down to 11.20. Like the indexes, the probabilities favor the downside this coming week as support levels of consequence have not been reached. Nonetheless, like the indexes, it is likely that at some point this week (likely at the beginning of the week) some strength will be seen with a possible upside objective of 11.70-11.85. Nonetheless, drops down to the previous low at 10.68 or even the 200-day MA, currently at 10.60, are likely to be seen before the end of the week. On the weekly chart, though, drops down to 9.64 are likely to be seen over the next 3-5 weeks. DDM, like the DOW had a classic reversal week with higher highs, lower lows, and a close below the previous weeks low. As such, further downside is likely to be seen. Nonetheless, like with its sister indexes, DDM did generate a small reversal upward on Friday and is now likely to go up to re-test the previous daily close resistance between 42.57 and 42.64. It is also possible the index will get back up to the 200-day MA, currently at 43.35. Having shorted the index at 42.41, it doesn't make sense to hold on to the short position if the index starts moving higher on Monday, and therefore liquidating the index at a profit and reselling it around 43.35 or even between 42.57 and 42.64, makes sense. By the same token, if Friday's low at 40.98 gets taken out, drops down to 38.99 will become probable.
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1) GPS - Averaged short at 24.17 (3 mentions). Stop loss now at 22.36. Stock closed on Friday at 20.20.
2) AMZN - Shorted at 127.60. Stop loss now at 125.74. Stock closed on Friday at 121.00
3) MCD - Shorted at 69.88. Stop loss at 69.15. Stock closed on Friday at 67.42.
4) AA - Covered short at 11.84. Shorted at 11.53. Loss on the trade of $31 per 100 shares plus commissions. Stop loss now at 11.78. Stock closed on Friday at 11.11.
5) VCLK - Shorted at 12.28. Stop loss now at 12.28. Stock closed on Friday at 11.47.
6) BEXP - Covered shorts at 16.95. Averaged short at 17.456. Profit on the trade of $151 per 100 shares (3 mentions) minus commissions.
7) TRW - Shorted at 31.14. Stop loss now at 32.16. Stock closed on Friday at 30.54.
8) SOHU - Averaged short at 44.362 (4 mentions). Stop loss now at 45.30. Stock closed on Friday at 42.02.
9) DD - Shorted at 39.07. Stop loss now at 38.68. Stock closed on Friday at 36.66.
10) KGC - Purchased at 17.92. Stop loss now at 17.61. Stock closed on Friday at 18.32.
11) AMZN - Shorted at 125.02. Covered shorts at 122.14. Profit on the trade of $288 per 100 shares minus commissions.
12) DDM - Shorted at 42.41. Stop loss now at 42.78. Index closed on Friday at 41.71.
13) ATI - Shorted at 51.56. No stop loss at present. Stock closed on Friday at 50.21.
14) HPQ - Averaged short at 47.15 (2 mentions). Stop loss now at 48.82. Stock closed on Friday at 45.92.
15) AMZN - Shorted at 120.40. Covered shorts at 121.05. Loss on the trade of $65 per 100 shares plus commissions.
15) AXP - Shorted at 42.20. Stop loss at 43.35. Stock closed on Friday at 42.67
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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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