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Issue #168 
March 28, 2010 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| NASDAQ Likely to have found its Top!
DOW Friday closing price - 10850
Once again the DOW generated a new 18-month weekly closing high, closing 108 points higher than last week's close and within shouting distance of the next major psychological resistance at 11000 (got up to intra-week to 10955), as well as of the 200-week and 50-month MA's, both currently at 11140.
The DOW shows no "recent" resistance levels pf consequence until 11140 is reached. From 2001 there is a weekly close resistance at 10864 and from 2005 at 10941. Nonetheless, both of these resistances are considered minor. As such, it can be said the index does not have any insurmountable obstacles in its way to another 200 point move to the upside.
On a weekly closing basis, resistance is minor at 10941 (from weekly closing highs seen in 2005). Above that level, the 11000 area is psychological resistance and the 200-week MA is currently at 11140. On a daily closing basis, resistance is minor at Thursday's close at 10887 and then nothing until minor resistance at 11027. On a weekly closing basis, support is minor to decent at 10325/10329 and strong at 10012. On a daily closing basis, support is minor at 10380/10397 from the most recent low daily close as well as from the 50-day MA. Below that level, resistance is decent at 10282 from a previous low close as well as from the 100-day MA. Decent support at 10067 and strong support at the most recent strong daily close at 9908.
It is interesting to note that this bull rally in the DOW is now being compared to the bull rally seen from Sep98 to Jan00 when the index moved from a low of 7400 to a high of 11750 (4350 points) over a period of 16 months. The present bull rally began last March from 6470 and now, 12 months later, is at 10955, a run of 4485 points. The question then becomes "is the market in better shape now than in the year 2000"?
There is a decent possibility that last week's rally up to 10955 is the top. There are two reasons that can be used for making such an assessment, starting with the "fact" that the Treasury Bond Auctions this past week were received poorly, giving notice that unless interest rates are increased immediately that it will become difficult for the government to continue to pay its bills. Higher interest rates at this time would be a strong negative to the market. The second reason has to do with another index, the NASDAQ, which has reached levels that if broken would put the index into the biggest bull run since the Dot .com era. Since that is a very unlikely scenario, it seems safe to assume that the NASDAQ is not going higher, somewhat preventing the DOW from going much higher itself.
For the last 7 weeks, the DOW has had higher weekly lows than the previous week and in order to maintain the momentum the index must continue that trend this week. This is especially true since last week's low was 10695 and a break below that low would also mean the breakout above the previous high at 10730 would be failing. As such, the parameters for the DOW this week are clearly defined by last week's trading range between 10695 and 10955. A break above 10955 would increase the probabilities of the index running up to the 11140 level, whereas a break below 10695 would likely signal that the top has been found at 10955 and that the indexes are heading lower.
Either way, it is likely that the DOW is reaching a major top that will likely be in place for at least 12-18 months, if not longer. It must also be mentioned that the Elliot Wave Theory states that a major top will be made something in the next 5 weeks (by May 1st) and that a new downtrend will start, not a correction but a new downtrend or double dip.
It is possible that as early as Monday a clue will be seen as to the direction for the week. The DOW is showing a possible spike high on Thursday at 10955, being surrounded with highs on Wednesday at 10888 and Friday at 10909. In addition, the index closed in the bottom half of the trading range on Friday which means that unless there is some positive news over the weekend, selling pressure will likely be present early Monday morning. A break below Friday's low at 10816 will put the bulls on the defensive and needing some positive news during the week to prevent the break of last week's low at 10695. By the same token, if the index is able to take out Friday's high at 10909, the probabilities will increase that the week's high at 10955 will be taken out.
NASDAQ Friday closing price - 2395
This past week the NASDAQ reached levels of resistance from 2008 that are likely to prove to be insurmountable without additional positive fundamental news of consequence. Unlike the other indexes that are still below their 200-week MA's and working with old resistances from 2001 through 2006, the NASDAQ is dealing with resistances seen immediately prior to the recessionary drop in September 2008. As such, these resistances have to be considered important and strong, as well as resistances the traders are giving importance to.
The NASDAQ was able to get above a minor intra-week resistance from Feb08 at 2419 (2413 on a weekly closing basis) with a rally up to 2431, but was unable to close above that level on Friday, having given up 50% of the week's gain on the weekly close. It is evident that selling at these levels is strong as the index had shown strong momentum to the upside closing near the highs of the week for the previous 6 weeks. With a close 50% below the high of the week, the upside momentum seems to be waning.
On a weekly closing basis, minor resistance is found at 2413. Above that level, decent resistance is found at 2453 and major at 2523. On a daily closing basis, decent to strong resistance is found at 2413/2415, strong resistance at 2453, and major at 2550. On a weekly closing basis, support is minor at 2326 and again at 2290. Strong support is found at 2239 and a bit stronger at 2210 (200-week MA). Below that level strong support is found at 2141. On a daily closing basis, support is minor at 2374 and again at 2362. Below that there is no support until minor support is found between 2282 and 2288 and minor again at the 50-day MA, currently at 2270. Below that level, support is strong between 2200 and 2213.
The NASDAQ has now fulfilled all of its upside objectives possible (under the guise of a recovery) to the levels prior to the recessionary period. Any further upside from here would put the index in a bull rally unlike any seen before except for the Dot.com rally of 1998-2000. It also must be mentioned that for the last year the NASDAQ has led the rally to the upside having increased in price 192% compared to the 177% in the SPX and the 169% in the DOW. For the past 2 weeks, though, that trend has stopped and all the indexes now seem to be on the same page. That likely means that the reasons for the traders were keying on the NASDAQ as the main index to buy have now disappeared.
The NASDAQ is also showing the possibility of having had a spike up day on Thursday when the index rallied up to 2432, as Tuesday's high was 2417 and Friday's high was 2413, both of those highs having been commensurate with the Feb08 highs at 2413 and 2419. As such, the 2432 high has the possibility of being a spike high top. If that is the case, it is very unlikely the index will be able to get above 2413/2419 any more. As such, that should be the main key to trading this coming week.
After 7 weeks in a row of higher weekly lows, if the NASDAQ is able to get below last week's low at 2358 (that level also being the most recent spike low on the daily chart) it is highly likely the top will be confirmed and the index will begin to head lower from here on in.
Possible trading range for the week might be 2417 to 2341.
SPX Friday closing price - 1167
The SPX attempted this past week to get above the major intra-week resistance levels from 2001/2002 at 1177 and 1174, with a rally on Thursday to 1181. Nonetheless, when the dust cleared on Friday, the index was unable to close above the 2001 weekly high close at 1174, giving notice that those "old" resistance levels continue to be looked at and respected. This is especially true since it cannot be said that there are any recent resistances at that price where the selling can be attributed to.
The SPX shows no recent resistance until minor resistance is found at 1200 and a bit stronger at the 200-week MA currently at 1225. In addition, most analysts have been stating for the past few weeks, if not the past few months, that 1200 would be seen. As such, it is difficult to explain why the index has been unable to get up to that level since it broke above the previous high at 1150 2 weeks ago, removing all obstacles from the path to reaching 1200.
On a weekly closing basis, there is no recent resistance until the 200-week MA, currently at 1225 is reached. Nonetheless, from 2001 there is decent resistance at 1174. On a daily closing basis, resistance is found at 1174 (Thursday's close). Above that level, there is only minor resistance at 1213 and a bit stronger at 1255. On a weekly closing basis, support is minor at 1102 and decent at 1066. On a daily closing basis, support is minor at 1150 and a bit stronger at 1150. Below that level there is decent support between 1091 and 1095, decent again at 1074 and strong at 1057.
Like with the other indexes, the SPX also shows the possibility of a spike top on Thursday when the index rallied up to 1181 and closed at 1174. With Tuesday's high at 1175 and Friday's high at 1174, both of those highs being somewhat important levels from 2001/2002, it is possible that the 1181 level is a spike high. Probabilities don't favor such a scenario as there is no recent resistance in the charts until 1200 to 1225 is reached. Nonetheless, with the NASDAQ showing a strong likelihood that it has found a top, the possibility that 1181 is a top does exist.
The probabilities at this time still favor the bulls and further upside in the index. Much of the talk about a top having been formed is based on the NASDAQ but it is possible that the DOW and the SPX will outperform the NASDAQ and continue higher by themselves. It is evident, though, that both on a daily and weekly closing basis, from 2001/2002 as well as from Thursday's close, that 1174 is now a very strong pivot point that will likely to decide the direction for the week. Having closed on Friday at 1167, it is likely that within the first day or two of the week, that decision (direction for the week) will be made. If the index is unable to get above 1174/1175 and drops below last week's low at 1153, the probabilities will increase exponentially that the top is formed.
It is possible that the poorly received Treasury Bond auction from this past week might become the fundamental catalyst that the market is waiting for to stop the momentum to the upside. One of the main supports for the market has been low interest rates and the continued statements from the Fed that they will remain low for quite some time. Yet, the Treasury Bond auctions are the only way the government can pay its bills and it is becoming increasingly evident that continued support for the huge amount of Bonds auctioned off is dependant on higher Bond yields which mean higher interest rates. As such, the Fed might be finding itself between a rock and a hard place and with no good options left.
It is also evident, with the problems seen recently in Portugal and Greece, that the financial problems besetting the world have not gone away but simply been swept under the rug for the last year. It must also be mentioned that previous bull markets were not faced with continued and likely higher unemployment numbers as well as with increasing foreclosures on a massive scale, not to mention the huge debt that continues to increase epically. As such, the recovery from this last recession seems to be built on wooden stilts (rather than cement supports) that can break at the first sign of tremors.
With the indexes at extremely lofty levels, when compared to where they were a year ago, and some many possible pitfalls still to be addressed, it is possible that things are beginning to unravel. It would not be surprising to see another massive financial earthquake hit Wall Street (big ones everywhere the past 12 months), causing the wooden stilts to crumble like matchsticks.
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Stock Analysis/Evaluation
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CHART Outlooks
The probabilities have increased that a top has been made in the indexes or at least in the NASDAQ. As such, all mentions this week will be sales or purchases in stocks that would likely go up if the indexes go down.
By the same token, it is not expected that the indexes will drop strongly at this time, so the sales are not likely to be a short-term profit option.
SALES
AIPC - Friday closing price 38.53
AIPC broke out from a major 10-month consolidation area between $26 and $36 in February. Based on chart factors alone, the breakout should have generated a strong rally/objective up near the all-time high at 52.56. Nonetheless, the stock over the past 5 weeks has run into a brick wall up at the $40 level, which was also at one time a major all-time high back in 1998. The inability of the stock to continue higher has opened up the possibility of a failure-to-follow-through signal being given. Such action, if confirmed, would bring in strong and decisive selling.
It must also be mentioned that in the period between 2001 and 2004, when AIPC traded and closed above $40 80% of the time (28 of 36 months), the $40 level proved to be a major pivot point as well as a support/resistance level. As such, the inability of the stock to get above $40 level for the past 6 weeks seems to indicate that level continuing to have major importance.
On a weekly closing basis, resistance is decent at 39.53 and minor at 39.21. Above that level there is decent resistance between 40.70 and 41.90. On a daily closing basis, resistance is decent between 39.03 and 39.21 and strong up at 39.88/39.90 from a double top at that price. On a weekly closing basis, support is minor at the previous high weekly close at 35.15 and again at the most recent low weekly close at 34.26. Below that level there is no support of consequence until the stock gets down to $30. On a daily closing basis, minor support is found at 38.31 and decent support at 37.69. Below that level there is no support until decent support is found at 35.00 where the 100-day MA is currently at.
Beginning the week of February 22nd and for the next 3 weeks thereafter, AIPC got up to 39.96, 39.97 and 39.99. Two weeks ago the bulls gave up trying to break that level and the stock fell to 37.19. Last week the bulls once again attempted a rally back up to $40 but fell short as the stock was only able to get as high as 39.47. In addition, the stock was unable to close out the week on a positive note as the close on Friday was $1 below the high of the week. As such, it is likely this past week's rally will be seen as a retest of the highs seen previously. If the stock is able to get below last week's low at 38.32, it will be considered a successful retest of the highs.
AIPC does not necessarily move in conjunction with the indexes so the probability that the indexes have topped out is not likely to have much of an effect on the stock. Nonetheless, having such a clearly defined and repeatedly tested resistance level to sell against is now a great incentive for the traders to short the stock.
It also must be mentioned that the breakout above $35 that was seen the first week of February will likely be tested at least once if the stock fails to get above $40 this coming week. In addition, a fall back down to $35 will negate the very bullish flag formation that had been built on the weekly chart over a period of 3 months. Such a failure might be disappointing and should the stock start trading below $35, selling will probably increase strongly and drops down to the bottom of the flag down at $25 would then be possible and perhaps even probable.
Sales of AIPC between 38.80 and 39.04 and using a stop loss at 40.09 and having an objective of 34.79 will offer a 4-1 risk/reward ratio.
My rating on the trade is 3.25 (on a scale of 1-5 with 5 being the highest).
YGE - Friday closing price 12.55
YGE was on a strong uptrend that started in Nov08 at 2.50 and topped out temporarily in Jun09 at 16.35. From June to December the stock consolidated its gains and in the last week of December the stock broke out of that 6 month consolidation phase giving notice that another strong up-trend was likely. Nonetheless, on the 2nd week of January the stock hit a brick wall as it approached the psychological resistance at $20 with a rally to 19.11 after it was announced that Germany would be cutting its solar subsidies substantially, forcing solar companies to compete with other energy options on a 1-1 basis.
YGE proceeded to drop from a high of 19.11 to a low of 12.53 over a period of 2 weeks following that announcement. On that drop, the breakout from the 3 month consolidation phase was wiped out and sell signals were given based on the failure to follow though seen. During the last 8 weeks the stock has continued to slowly deteriorate while building a bearish pennant formation that projects much lower prices.
On a weekly closing basis, resistance is decent at 12.88 and again at 13.26. On a daily closing basis, resistance is decent to strong at 12.53 and then again at 12.88. Above that level, there is very strong resistance between 13.26 and 13.50 from several previous daily closes, as well as from the 200-day MA. On a weekly closing basis, support is decent to strong between 11.58 and 11.69. Below that level, resistance is decent at 11.02 and a bit stronger at 10.24. Below that level there is no support until a previous breakout high is reached down at 7.43. On a daily closing basis, support is minor at 12.21 and again at 11.86. Decent to strong support is found between 11.58 and 11.69 and again at 11.23. Below that level, support is strong between 10.17 and 10.29.
It is evident that solar companies in general are weak and under selling pressure due to the cutting of solar subsidies in many countries. Nonetheless, YGE is actually showing a more bearish chart than many of the other solar companies, especially since the stock has given a failure-to-follow-through signal as well as built a bearish pennant formation. The flagpole is the drop from 19.11 to 12.53 and the pennant is the recent trading range between 13.97 and 10.84.
In addition, YGE has built a double top on the intra-day chart at 13.97 and is now presently trading below the 200-week MA, currently at 13.20. It is possible that the stock will be heading back up to the 200-day MA this week as on Friday the stock showed a mini up spike that could relate to further upside on Monday.
Sales of YGE between 13.00 and 13.20 and using a stop loss at 13.97 and having an objective of at least 9.68 will offer a risk/reward ratio of 3.5-1.
My rating on the trade is 4.00 (on a scale of 1-5 with 5 being the highest).
AKS Friday Closing Price - 23.01
AKS has been trading between $15 and $25 since June of last year, with the $20 level being a strong pivot point. Nonetheless, since the beginning of the year (January) the stock seems to have been building a top formation that possibly includes a Head & Shoulders pattern. Such a formation could be signaling that the strength of the last 4 months is beginning to wane. It is likely this company will react to whatever the indexes do, and therefore looks like a good short.
It must also be mentioned that the 100-week MA has been trending down and that AKS is now trading close to that line and that could end up being the catalyst the stock needs to generate a trend down.
On a weekly closing basis, resistance is strong at 24.88 and again strong at 25.77. On a daily closing basis, resistance is decent to strong between 23.33 and 23.39, strong again at 24.88 and very strong at 25.77. On a weekly closing basis, support is minor at 22.05 and again at 21.53. Support is strong between 19.93 and 20.19. Below that level there is no support until strong support from a double bottom is found at 15.87/15.89. On a daily closing basis, support is minor at 22.49 and minor again at 22.05. Decent support is found at 21.53 from a previous daily low close as well as from the 100-day MA. Below that, there is strong support between 19.46 and 20.50 from a slew of daily closes in that area, as well as from the 200-day MA, currently at 20.50.
AKS has built a possible Head & Shoulders formation with the left shoulder at 24.27, the head at 26.75, and the right shoulder at 25.24. The neckline is down at 19.22. If broken, the objective would be 11.72. The objective is a viable one if the stock is able to get below the double bottom weekly close support at 15.87.
Nonetheless, the stock has been trading consistently for 9 months between $15 and $25 and if the indexes are topping out, drops down to the bottom of the trading range seem likely to occur.
On Thursday, AKS had a classic reversal day (higher highs, lower lows and a close below the previous day's low). Nonetheless, on Friday there was no follow through to the reversal as the stock had an inside day. As such, the probabilities seem to favor the stock attempting to reach Thursday's high at 23.92. Nonetheless, there is good resistance up at 23.64 that should stop the rally.
Sales of AKS between 23.24 and 23.61 and using a stop loss at 24.37 and having an objective of 19.15 will offer a 4-1 risk/reward ratio.
My rating on trade is a 3.75 (on a scale of 1-5 with 5 being the highest).
PURCHASES
KGC Friday Closing Price - 17.00
KGC has been moving down in price over the past 5 months in spite of the strength of Gold. Nonetheless, the stock has now reached levels of chart support as well as price support where further downside is unlikely to occur unless the price of gold drops below $1000. Such a drop in the price of Gold is unlikely to occur.
Many analysts predict that the price of gold will continue upward as governments persist in printing money to help the economies get out of the global recession they are in. Such action is likely to bring overall inflation to the world and increased hunger for the security of a hard asset like Gold.
On a weekly closing basis, resistance is minor 17.94 and decent to strong at the most recent high as well as 100-week MA at 19.10. Above that level, resistance is strong between 20.20.22 and 20.49. Strong resistance is found at 23.14. On a daily closing basis, resistance is decent between 17.92 and 18.16. Above that level, there is decent resistance at 18.83 and a bit stronger at 19.10. Strong resistance is found between 20.49 and 20.61. On a weekly closing basis, support is very strong at 16.26 from an important previous low as well as from the 200-week MA. On a daily closing basis, support is minor at 16.81 and again at 16.85. Strong support is found between 16.26 and 16.39.
KGC has been slowly deteriorating in price over the past few months as the price of gold has remained somewhat stagnant around the $1100 level. Nonetheless, if the indexes have topped out and there is a strong profit taking binge, it is likely some of those profits will be invested in hard assets, such as gold, thus generating a new upside run.
Since 2002 KGC has been able to stay above the 200-week MA, having tested that line successfully on 3 separate occasions over a period of 8 years. There was one exception in Oct/Nov08 when the stock market was collapsing, that the line was broken for a period of 4 weeks. Nonetheless, after 4 weeks the stock negated that break and subsequently tested that line successfully on 2 occasions thereafter. As such, it can be said with a degree of confidence that the 200-week MA is a strong and reliable support. The 200-week MA is currently at 16.50.
The stock has been in a short-term downtrend for the past 5 months, which might have culminated in the last week of January with the latest successful retest of the 200-week MA at 16.26. It is now likely the recent downturn seen over the past 5 weeks might just be the last retest needed to confirm the support and turn the trend around. The probabilities favor such a scenario.
Nonetheless, it is evident by KGC's downtrend in the face of Gold rallying, that even if the stock holds itself above the 200-week MA one more time, that rallies are likely to be limited at this time. The strong resistance seen at the $20 level is likely to stymie any further upside, at least at this time. By the same token, if the stock holds support, that objective seems to be highly viable.
Purchases of KGC between 16.50 and 16.80 and using a stop loss at 16.03 and having an objective of 20.49 will offer a risk/reward ratio of 4-1.
My rating on the trade is a 3.00 (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 reversal week having made new 18-month highs then going below last week low and closing in the red. In addition, with the rally up to 17.41, as well as previous week's close at 17.08, it can be said the decent resistance at 17.70 has been tested successfully. It must also be mentioned that the break of the previous high daily close at 16.92 was negated when the stock closed below that level on both Thursday and Friday. As such, it is now highly likely that a top has been formed and that the stock will be heading lower from here. Strong intra-day resistance will be seen at 17.00 and again, but more minor, at 17.24. On a daily closing basis, it is unlikely the stock will close above 16.92 any more. Decent support will be found at 16.00 but if broken, a drop down to 15.50 will be likely. On an intra-week and weekly closing basis, likely first objective to the downside will be 14.65-15.00. Rallies back up to 16.92-17.00 should be sold or used to liquidate long positions. GIGM had an uneventful week with higher lows and lower highs than the previous week. In looking at the chart, it seems safe to assume the stock will continue to trade between 3.10 and 3.38 for the next week or two. Chart seems to favor the stock moving up but the 100-day MA is now down to 3.38 and that gives that resistance level more strength. A break above 3.38 would be bullish while a break below 3.00 bearish. No probability numbers can be given this week. WMT had a very uneventful week trading between 55.43 and 56.04 during the week. In addition, the stock had an inside week on the weekly chart (higher lows and lower highs), making this past week a non-event. Nonetheless, the stock continues to trade above the breakout point at 55.09/55.20 and shows a very bullish chart formation on both the daily and weekly chart. The daily chart shows a flag formation with the flagpole being the rally from 53.53 to 56.27 and the flag being the last 2 week's trading range between 55.13 and 56.17. A break above the top of the flag (56.27) gives an objective of a strong run up to 57.87. Probabilities continue to favor the upside. Keep in mind this is not a stock that mirrors the indexes, in fact more often than not goes against the indexes. CAL tested the previous week's high at 23.65 as well as the 200-week MA, currently at 23.40 with a rally this past week to 23.32. On the daily chart, with Friday's close in the red, the retest of the highs can now be considered successful. The stock continues to show decent support at the previous high at 21.54 (21.20 on a daily closing basis). Nonetheless, the fact the stock has shown strong intra-day selling the past 2 days having gotten above 23.00 on both days but closing below 22.50 and near the lows of each day, suggests that no further upside is likely to be seen unless the indexes head higher. Decent intra-day support is found at 21.25 and then again at 20.00. Any daily close above 22.50 would get rid of some of the immediate selling pressure. VALE once again attempted to break above the previous 20-month high at 31.96 with a second rally to 31.90 (first attempt was the previous week with a rally up to 31.95). By the same token, the stock, by closing at 30.72, was also unable to confirm that the close 2 weeks ago at 30.67 was the successful retest of the 31.48 weekly closing high. This leaves the traders still unsure of what is going to happen. It must also be mentioned that the gap down at 30.18 is still unclosed and until that gap is closed, the bears will continue to trade the stock gingerly. The stock did close near the lows of the day on Friday and should see further weakness on Monday. The double top at 31.96 (31.48/31.57 on a daily closing basis) still looms ominously. Any close below 29.77 will be a sell signal while a close above 31.57 would be a buy signal. It is highly likely that some clarification will be seen this week. HON punched through the 200-week MA, currently at 44.55, with a rally up to 45.28. Nonetheless, the stock came back down for the weekly close to close right on the line, leaving the decision as to its immediate future up to whatever the indexes decide to do. It must also be mentioned that the $45 level is also a psychological resistance and therefore it is unlikely that both the 200-week MA and the psychological resistance will be broken unless the indexes continue higher. Nonetheless, other than closing below 68 points below the high and on the 200-week MA, there was no indication on the chart that the stock has found a top. A red close next Friday, though, would be a strong indication that a top has been found. In addition, a drop below this past week's low at 43.41 would also increase the probabilities that the stock has found a top. Any rally above the previous week's high at 45.28 would be bullish. Stops should now be placed at 45.38. KO continues to trade around the short-term important pivot and psychological price at 55.00. In addition, the stock is presently in a $2 trading range between 53.72 and 55.92 that has no meaning or direction. Nonetheless, the weekly chart does show a high probability that a Head & Shoulders formation is in place with the left shoulder being 55.50, the head being 59.45 and the right shoulder being 55.92. The neckline is at 52.23. A break below the neckline projects a drop down to 45.01. If the Head & Shoulders formation is valid, the 55.92 level will not get broken. As such stops should be placed at 56.02. Though the objective of the H&S formation is 45.01, there is good support at 52.23, stronger support at 51.00 and very strong support at 50.00. It is likely the stock will decide what to do, based on the action in the indexes. OSK was unable to confirm the resistance at $40 having closed higher than the previous week's close at 39.85. Nonetheless, the close at 40.14 is still within the parameters (39.70-40.30) of the major $40 resistance level. The stock did attempt to re-generate the previous up-trend that stalled in November at 41.99 with a rally this past week to 41.72. Nonetheless, that rally failed to generate a new high and now the stock may be show a double top on the intra-week chart if the stock trades below this past week's low at 39.15. It is evident that the $40 level is a major pivot point this week, as it has been for the last 4 months. Should the stock start trading below 40.00, it is likely the bears will increase the selling pressure. Vice versa to the upside with the bulls doing the same if the stock continues to trade above 40.00. It is likely that will be decided by the indexes. Nonetheless, it should be mentioned that the stock is presently stalled at this level and the probabilities favor the downside unless some "positive" catalyst is found. This stock is likely the best short of the ones mentioned, especially if it starts to trade below $40 this week. Any move this week below 39.15 will bring strong selling pressure. Only a break above 41.92 will be a positive for the bulls. QQQQ is directly related to the NASDAQ and therefore the comment written above on the index should be used to trade this stock. Nonetheless, let me give you some exact parameters on this index. Minor support is found at 47.25 and stronger support is found at the previous important high at 46.64. Strong support below that is at 43.30 and then even stronger at 42.12. Resistance is very strong at 48.57/48.60. Stops should be placed at 48.70. A break below this past week's low at 47.25 will suggest that a top has been set. In addition, that event would also make this past week's high at 48.60 into a double top with the high at 48.57 made in the week of August 11th 2008. This index, like the NASDAQ, shows no room to go higher without turning the rally into a "major" bull market.
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1) AMZN - Purchased at 129.32. Liquidated at 128.62. Loss on the trade of $70 per 100 shares per 100 shares plus commissions.
2) GIGM - Purchased at 2.87. Stop loss now raised to 2.93. Stock closed on Friday at 3.18.
3) WMT - Purchased at 55.25. Averaged long at 53.80 (4 mentions). Stop loss raised to 54.24. Stock closed on Friday at 55.51.
4) ELON - Liquidated at 9.37. Purchased at 8.86. Profit of $51 per 100 shares minus commissions.
5) VALE - Liquidated at 29.32. Averaged short at 30.54 Profit on the trade of $224 per 100 shares (2 mentions) minus commissions.
6) MS - Covered shorts at 29.32. Averaged short at 27.935. Loss on the trade of $277 per 100 shares (2 mentions) plus commissions. .
7) OSK - shorted at 41.73. Stop loss lowered to 41.88. Stock closed on Friday at 40.14.
8) BA - Liquidated at 73.08. Purchased at 71.73. Profit on the trade of $135 per 100 shares minus commissions.
9) VALE - Shorted at 31.35. Stop loss at 32.08. Stock closed on Friday at 30.79.
10) HON - Shorted at 44.30. Stop loss now at 45.38. Stock closed on Friday at 44.60.
11) QCOM - Shorted at 40.53. Covered shorts at 42.77. Loss on the trade of $224 per 100 shares plus commissions.
12) QQQQ - Shorted at 48.39. Stop loss is at 48.70. Index closed on Friday at 48.00.
13) KO - Shorted at 55.13. Stop loss at 56.00. Stock closed on Friday at 54.65.
14) CAL - Shorted at 23.15. Stop loss at 23.79. Stock closed on Friday at 22.25.
15) TRLG - Covered shorts at 28.66. Shorted at 29.48. Profit on the trade of $82 per 100 shares minus commissions.
16) CAL - Covered shorts at 21.32. Averaged short at 23.23. Profit on the trade of $382 per 100 shares (2 mentions) minus commissions.
17) AMZN - Liquidated at 127.95. Purchased at 129.86. Loss on the trade of $191 per 100 shares plus commissions.
Previous Newsletters
View Feb 28, 2009 Newsletter View Mch 7, 2009 Newsletter View Mch 14, 2009 Newsletter View Mch 21, 2009 Newsletter
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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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