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Issue #191 
September 5, 2010 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| Double Dip Recession Fears Eased!
DOW Friday closing price - 10447
Due to the better-than-expected nature of the economic reports this past week, the DOW was able to negate the strongly bearish chart formations that had been built over the past couple of weeks and turn the table on the momentum the bears had achieved. Up until Wednesday it was believed the index would establish itself below the psychologically strong 10,000 support level and begin the feared drop into a Double Dip Recession, but when the ISM Index report came out on Wednesday showing that the manufacturers were in fact not reducing but increasing their production, the market was forced to re-think its bearish stance.
This was once again re-affirmed on Friday with a better-than-expected Jobs report showing that private sector hiring increased slightly, rather than decreased as had been the recent trend. The DOW was then able to get above the top of a general resistance area at 10300 and rally back up to close on the 200-day MA, and once again put everything into disarray.
On a weekly closing basis, resistance is decent to strong at 10451. Above that level there is no resistance until strong resistance is found between 10618 and 10654. On a daily closing basis, resistance is, minor at 10538 and strong at 10699. On a weekly closing basis, support is decent at 10155, decent between 10012 and 9932, and strong at 9688. On a daily closing basis, minor support is found at 10303, minor again at 10098 and strong at 9986.
One set of positive economic reports does not necessarily signify a major change in the overall economic outlook but it does mean that the strongly bearish stance that has been prevalent during the past few weeks is overdone or somewhat time-frame inaccurate. It is more a case of what shade of gray is present, rather than whether it is black or white.
It must be mentioned that history considers September to be a generally bad month and October to be down intra-month but reversing direction by the end of the month. In the past 11 years, September has been a strongly down month on 6 different occasions but on 5 occasions the DOW saw a sideways to slightly up formation, with the key word being "slight". In looking at the chart of all those years, the formation most like what is being seen right now is 2005 and on that year the index basically traded sideways with highs for August at 10719, for September of 10702 and for October of 10609. The lows for those months were 10349, 10351, and 10159 respectively.
Based on the fact that the important economic reports seen this past week won't be seen again for another 4 weeks, and also based on the fact the index was able to get above the 10300 level, but stopped at the 200-day MA at 10450, seems to suggest that the probabilities are high that the DOW will mimic 2005, at least as far as the type of trading to be seen if not the price ranges. As such, the possibilities are starting to increase that the DOW will probably trade during the month of September between 10600/10700 on the upside and 9900/10,000 on the downside.
In looking at this year's weekly chart, the chart shows decent to strong resistance up at 10594. This resistance level seems to be a possible upside objective this coming week. To the downside, the 9890 to 9970 level seems to be a possible downside objective for the month but probably not this coming week. Nonetheless, having seen a 509 point trading range this past week, if the 10594 resistance level holds up and the DOW mimics the trading range seen, it would give a possible downside objective of 10085. Nonetheless, it is unlikely that the trading range will be anything like last week due to the lack of economic news due out this week.
One thing that can be said with a certain degree of confidence is that the strong bearishness that was being talked about over the past couple of weeks has been put aside temporarily, unless some unexpected negative news comes out. To the upside, it is also unlikely that much will be accomplished as the economic news that did come out, though better than anticipated, still shows the economy muddling along and not likely to get much better at this time.
The 10300 level in the DOW is likely to be a pivot point throughout the week. Drops down to that level are highly likely to be seen under any circumstance, but if there is any "real" strength in this past week's rally, it would be unlikely that the index will go below that level. If that were to be the case, rallies up to as high as 10724 could be seen.
NASDAQ Friday closing price - 2234
For the 4th occasion since December 2009, the NASDAQ was able to close above the 200-week MA, currently at 2220. With 3 previous occasions over a period of 40 weeks of trading above the line as well as 3 occasions trading below the line it is now clearly evident that the traders have not been able to determine what direction the index is likely to be take in the future. It is therefore likely that the index is trading sideways and likely to continue doing that for at least another month.
It must also be mentioned that since 1999 the NASDAQ has shown a strong tendency to pivot around the 2250 level, having been, generally speaking, the high, low or close on at least 6 occasions in the past 10 years. Based on what happened this past week, the probabilities are high that same scenario will be repeated at least one more time.
On a weekly closing basis, resistance is decent to strong at 2288 and again decent to strong between 2310 and 2317. On a daily closing basis, there is decent resistance at 2250, decent again at 2270/2278, and strong at 2306/2310. On a weekly closing basis, support is minor at 2219, decent to strong between 2141 and 2154 and strong at 2092. On a daily closing basis, support is minor at 2200, minor to decent at 2179, and minor to decent at 2173. Below that, there is decent support at 2173, decent to strong at 2114 and strong at 2092.
The NASDAQ this past week (over a period of 3 days) generated a breakaway gap between 2129 and 2142 as well as a runaway gap between 2200 and 2214. By the same token, the index is facing a third open gap to the downside between 2262 and 2237 that will work as resistance this week, but ultimately should be closed due to the strength the index closed with on Friday as well as the fact that third gaps rarely are left open. If the gap is closed this coming week, rallies up to the 100 and 200 day MA's, both currently up at 2270, should be seen. It must also be mentioned that the 2270 level can be considered decent resistance, not only because 2 important moving averages are at that price but also because the 2270-2278 area has shown itself to be the previous highs and lows of consequence on 3 occasions in the past 9 months.
To the downside, the NASDAQ should find some support at the runaway gap area between 2200 and 2214, but if the gap is closed, the breakaway gap down at 2129 will begin to work as a magnet. Nonetheless, decent to strong support can now be expected to be found at 2140. The 2200 level should be considered a pivot point for this coming week.
It is likely that at the beginning of the week follow through buying will be seen in the NASDAQ taking the index up to 2270 by Tuesday at the latest. Nonetheless, due to the lack of bullish fundamentals, if the momentum stalls at that price, profit taking will occur and the bulls will be back on the defensive and the early week's gains will have likely disappeared by Thursday.
SPX Friday closing price - 1105
The SPX continued to prove that it is in a sideways trading range between 1040 and 1120 having closed last week at an important weekly close support at 1065 and generating a green close this week. It is now likely the index is on its way to test once again the upper area of the trading range at 1120. Nonetheless, with the index representing the financial and banking industry, the industry that was the main culprit in the decline of the market during the past 2 years, it remains the key indicator as to the "true" health, or lack thereof, of the market.
The trading range and chart pattern the SPX finds itself in is geared more toward bearish outcomes and until that changes, the probability will continue to favor the downside. By the same token, the resistance levels are closer in this index than they are in others, and that likely means that traders will be paying more attention to the SPX than any of the other indexes.
On a weekly closing basis, resistance is strong between 1118 and 1122. Above that level, there is minor resistance at 1136 and decent resistance at 1145. On a daily closing basis, resistance decent to strong between the 200-day MA, currently at 1115, and a previous daily close of consequence at 1118. Above that level resistance is decent to strong at 1128 and then nothing until 1150. On a weekly closing basis, decent support is found at 1065/1066 and strong support at 1023. Below that level there is decent support at 1014 (100-week MA) and decent to strong at 1000 (psychological support). On a daily closing basis, support is minor at 1179 and decent at 1065. Below that, there is strong support at 1047/1050 and strong to major at 1023.
On a daily closing basis, the SPX has now traded for a total of 5 months between 1050 and 1120, with 2 exceptions when the index got up to 1128 and when it got down to 1023. As such, the probabilities continue to be very high that the index will continue to move in that trading range, especially in a month that is known to be generally negative (September). With the index closing at 1105 on Friday, it is unlikely that much more than about 10-15 points to the upside will be seen this coming week. In addition, there is no fundamental reason to believe that at this time the index can establish itself above the 200-day MA, currently at 1115.
This coming week is likely to be very important as the momentum is on the side of the bulls but the resistance levels close by. One of the other will likely emerge as the victor. If by any chance the index is able to close above 1118/1121 next Friday, short-covering will likely be high and the index would probably lead the way to the upside on a type of breakout that could panic the bears and take the index up to at least the 1150 level. The probabilities don't favor this latter scenario so a return to the 70 point trading range mentioned above is likely to be end result.
The SPX did gap up on Friday between 1090 and 1094 and this is an index that rarely generates gaps and even more rarely leaves them open. There is some minor to decent intra-week support at 1088, so the probabilities of the index trading between 1121 and 1088 this coming week are good.
Most of what was seen this past week was short-covering. There has been such a bearish fundamental and technical outlook permeating the market for the past couple of weeks that the better-than-expected-but-still-not-great economic reports that came out this past week caused a slight panic attack in the bear camp that brought in a high level of short liquidations. Nonetheless, the reports are far from good and the resistance levels the indexes find themselves facing close-by are likely to be impossible to break without further confirmation that things are good. With no economic reports of consequence due out this coming week, that is going to be difficult to accomplish for the bulls.
Nonetheless, the bulls do have momentum from the strong rallies seen Wednesday through Friday and further upside is expected to be seen the first couple of days of the week. The close at the highs of the day and of the week on Friday, suggests that higher highs will be seen this coming week, most likely on Monday.
On the other side of the coin, the strongest economic report this past week was in the Manufacturing sector, not only in the US but in China as well. Manufacturing only represents 15% of GDP and therefore the reports have to be taken with a slight grain of salt as the service part of the economy remains underwater. With few important economic reports due out over the next 3 weeks and the fact that September has always been known as a bad month for the bulls, it is likely that after some initial buying this coming week that a return to last months lows will be seen. By the same token, it is unlikely those lows will be broken unless negative news comes out.
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Stock Analysis/Evaluation
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CHART Outlooks
With the fear of a Double Dip Recession easing the indexes are likely to be in a trading range for the next few weeks, with stocks following their own chart formations and not necessarily mimicking the indexes. By the same token, the economic scenario is still not good and the bias will continue to be "slightly" to the downside. As such, strong rallies should still be sold. Nonetheless, there are a "few" stocks that find themselves oversold and still at low prices that due to short-covering could outperform the indexes over the next couple of weeks.
This week there are 2 sells, 1 purchase, and 1 sell/purchase. The sells, though, require that the stocks in question rally up to the desired entry points. The probabilities do favor that happening at the beginning of the week. The purchases, though, are in oversold stocks that are likely to see short-covering rather than a lot of new buying, as such the probability ratings will be slightly lower.
SALES
JNPR - Friday closing price - 28.99
JNPR since January 1st 2001 (81 months) has traded between a low of $12 and a high of $32 for 97% of the time. There was one period of time during the height of the last bull market back in Aug07 to Jan08, where the stock was above the $32 level with a rally as high as $38, but in general during the last 9 years the $30 to $32 level has stopped all rallies. Based on the fact that there is no reason to think that a new bull market is in place, or that the stock itself in on a bull run, it is likely that trend will continue for at least the next few weeks if not longer.
In April of this year, JNPR got as high as 32.16 and upon reaching that level it promptly fell all the way down to 22.25 within a period of 12 weeks, showing that the selling up above $30 remains strong. Based on the recent rally in the indexes, the stock is presently in a rally back up to test the $32 level but it is unlikely at this time that it will be successful in accomplishing anything more than a retest of that high.
On a weekly closing basis, resistance is decent at 28.89 and strong at 31.65. On a daily closing basis, resistance is decent to strong between 28.85 and 28.92, minor to decent between 29.87 and 30.07, and strong at 31.98. On a weekly closing basis, support is minor between 27.00 and 27.20, decent at 25.63, and decent to strong between 24.76 and 25.20. On a daily closing basis, support is minor to decent between 27.20 and 27.60, and decent between 25.63 and 25.90. Below that, support is decent at 23.98 and strong at 22.82.
Since May of this year, JNPR has shown strong resistance, on a daily closing basis, between 28.69 and 28.82. The stock closed on Friday slightly above that level with a close at 28.99 and it is expected that some follow through will be seen this coming week, likely breaking that resistance and taking the stock up to test the $30 as well as close a gap that is open since April 20th between 30.33 and 30.69. It seem evident that is the main objective of what appears to be a mini breakout seen on Friday.
On the daily chart, resistance is decent between 30.90 and 31.22 and on the weekly chart, and going back to 2004, there are 2 previous highs at 30.25 and again at 31.25 that also seem to be possible objectives. One thing that is unlikely, though, that the recent high at 32.16 will be taken out, based on the market fundamentals and chart history of the stock during the past 9 years.
To the downside, the stock now shows decent support between 24.76 and 25.63, as well as having the 100-day MA, currently at 24.51 and the 200-day MA currently at 23.40. It is likely that during the next 4 weeks, at least until the next set of economic reports of consequence are due out, that the stock could easily trade between 30.90 and 25.63.
Sales of JNPR between 30.68 and 31.24 and using a stop loss at 32.26 and having an objective of 24.70 to 25.63 will offer a risk/reward ratio of 4-1.
My rating on the trade is a 4.0 (on a scale of 1-5 with 5 being the strongest).
AXP Friday closing price - 40.91
AXP has been building a top formation since November of last year and since April has been using the 200-week MA, currently at 42.10, as a pivot point in the process. The stock recently retested the 27-month weekly closing high at 48.05 with a close 7 weeks ago at 44.79. Soon thereafter the stock fell back down below the 200-week MA and has been giving further signs that a top has been formed.
During the last 9 months, AXP has traded 80% of the time between $37 and $43 and since June 2009, the stock has held firm above the 50-week MA, currently at 40.10. Nonetheless, 2 weeks ago the stock began to show additional weakness having broken intra-week below the 50-week MA. Due to the index rally this past week, the stock was able to generate some strength and got close to the 200-week MA, currently at 42, with a rally up to 41.83. Expecting further strength in the indexes at the beginning of the week, it is likely the stock will get into the $42-$43 which is where all the strong resistance presently lies.
On a weekly closing basis, resistance is strong between the 200-week MA, currently at 42.10 and up to 42.67. Above that level, resistance is strong again at 44.79. On a daily closing basis, resistance is minor at 40.97, decent at 41.35, and decent to strong at 42.67. On a weekly closing basis, there is minor support at 40.76, minor again at 39.42 and then decent to strong between 37.66 and 38.41. On a daily closing basis, support is minor at 39.57 and again at 39.21. Below that level, there is decent support at 37.71 and again at 36.69.
AXP was able to close above the 200-day MA on Friday, currently at 41.35, opening the door for additional upside. Objectives include the 200-week MA at 42.10, the 100-day MA at 42.30 and even possibly as high as 2 highs of consequence seen this past year at 43.14 and 43.25. Nonetheless, the financial/banking stocks continue to be the most pressured industry in the market at this time and there is no reason to think that is going to change any time soon. With expectations that a possible short term high (3-4 weeks) will be seen in the indexes this week, financial stocks should be the first to be shorted.
As far as the downside is concerned, the fact the stock has been trading consistently over the past 9 months with an array of lows (more than 5) between 36.60 and 37.26, suggests that a drop down to that area is highly probable.
Sales of AXP between 42.10 and 42.74 and using a stop loss at 43.35 and having an objective of 37.00 offers a 5-1 risk/reward ratio.
My rating on the trade is a 3.75 (on a scale of 1-5 with 5 being the strongest).
SALE/PURCHASE
ITT Friday closing price - 46.05
ITT has been in a well-defined downtrend since the stock failed to follow through on a new 20-month high in August at 57.99. The failure to follow through caused the stock to drop all the way back down to 42.05 and in the process to break below the 100-week MA where it has stayed 15 of the last 16 weeks. Nonetheless, with the recent gains in the indexes and the strong oversold condition, the stock is rallying and further upside is expected.
On a weekly closing basis, resistance is decent between 48.53 and 48.59 and strong at 49.51. On a daily closing basis, there is minor resistance at 46.92 and 47.23. Above that level, there is decent resistance between 48.53 and 48.90, and then strong resistance at 50.42. On a weekly closing basis, support is minor to decent at 44.67 and decent to strong at 43.87. On a daily closing basis, support is decent between 44.59 and 44.97, minor at 43.98 and 43.07, and strong at 42.50.
ITT has been in a strong downtrend that is not likely to change to an uptrend at this time. Nonetheless, having found a possible bottom 2 weeks ago, being in an oversold condition, and with the indexes not likely to break down for at least the next 4 weeks, the stock has a strong probability of generating a fast rally back up to or near the $50 level. As such, this mention can be used by both bulls and bears, depending on the entry point into the trade.
In July, the stock got into a fast-track move up that took the stock up $5 in a matter of 6 trading days. It seems the stock is trying to mimic that pattern again. On Friday, the stock gave a buy signal when it closed above $45 and faces little resistance until the 49.16 to 49.36 level is reached. By the same token, once that level is reached, the probabilities are high the stock will go back down to the $43 level to retest the recent lows.
There is an open gap between 48.96 and 47.97 that is now a magnet, and likely to be closed, due to the fact the indexes are not in a Double Dip Recession fear scenario for at least the next 4 weeks. The 100-day MA is currently at 48.51 and the 200-day MA is currently at 49.85 and therefore the upside objectives are quite clear with very well-defined and copious resistance around the $49 level.
Support will now be decent to strong between $43 and $44 but the probabilities of the stock seeing that level again within the next 3-4 weeks are high. A trading range between $43 and $49 is the most likely scenario.
Sales of ITT between 49.12 and 49.36 and using a stop loss at 50.89 and having an objective of 43.13 will offer a 3.4-1 risk/reward ratio. Nonetheless, for those of you that are a bit more aggressive, a purchase at Friday's closing price of 46.05 and using a stop loss at 45.12 and having an objective of 49.12 will also offer almost the same kind of risk/reward ratio.
My rating on the trade is a 3.75 to the downside and 3.25 to the upside (on a scale of 1-5 with 5 being the highest).
PURCHASES
SNDK Friday closing price - 36.95
SNDK generated a reversal type week having made new 5-month lows and closing in the green. In addition, the stock fell down to the 50-week MA but held that line, suggesting that the probabilities are high that the stock has found a temporary bottom and will likely retrace some of its recent losses, especially since it is likely the indexes will be in a trading range for the next 3-4 weeks and oversold stocks such as SNDK are likely to see some short-covering.
SNDK had previously been in an uptrend of consequence since Nov08 when the stock got down to the $5 level. Nonetheless, upon getting above the $40 level the stock got into a sideways pattern between $40 and $50 that lasted over 4 months and which was broken just 2 weeks ago when the entire marketplace seemed to be heading into a Double Dip Recession. With that concern out of the picture for at least the next 4 week, the probabilities of the stock getting back up to test the $40 level are high.
On a weekly closing basis, resistance is minor at 38.65 and then nothing of consequence until minor to decent resistance is found at 44.61, and a bit stronger at 45.14. On a daily closing basis, resistance is minor at 38.63, decent at $40 from a psychological point of view, and decent at the 100-day MA, currently at 42.70. Above that level, resistance is strong between 44.27 and 44.86. On a weekly closing basis, support is decent at 34.19. Below that, support is decent to strong at $30. On a daily closing basis, support is decent at the 200-day MA, currently at 35.80 and decent to strong at the most recent low daily close at 33.13.
SNDK is a short-term fast in and out trade trying to take advantage of the previous strength in the stock as well as the lack of weakness now seen in the indexes. In addition, the stock has a clearly defined objective to the upside that has a high probability of being reached even within the context of a bear trend. It must also be mentioned that even though the probabilities are high that the stock will be in a trading range for the next few months between $30 and $40, much like the trading range seen the past 4 months between $40 and $50, with the recovery in the indexes this past week, the probabilities are high that the upside will be tested first, if for no other reason than to test the validity of the recent breakdown.
SNDK was showing quite a bit of weakness 1 week ago when the stock broke below the 200-day MA, currently at 35.80. Nonetheless, that break was negated on Thursday with a close at 36.01 and confirmed with a second higher close on Friday. This action suggests that buying and/or short-covering is likely to be seen this coming week. Nonetheless, the stock did generate a gap on Friday between 36.34 and 36.59 that is not likely to stay open as the stock is presently in a bear trend. In addition, the stock did not participate in the late rally in the indexes having closed in the lower half of the trading range on Friday. As such, the probabilities are strong that the stock will close the gap on Monday, as well as retest the 200-day MA, before heading higher.
To the upside, the resistance will be strong up at $40 but on an intra-week basis, there is a good possibility that the gap up at 40.72 will be closed, especially if the indexes continue to show some strength. Support should be the 200-day MA at 35.80 but the stock also shows a couple of minor intra-week previous lows at 35.33 and 35.39 which should hold if the stock is heading higher.
Purchases of SNDK between 35.80 and 36.34, using a stop loss at 35.23 and having an objective of 40.72 will offer a 5-1 risk/reward ratio.
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Updates
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| Monthly & Yearly Portfolio Results
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Closed Trades, Open Positions and Stop Loss Changes
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Status of account for 2007: Profit of $9,758 per 100 shares after losses and commissions were subtracted. Status of account for 2010, as of 7/30 Profit of $17,337 using 100 shares per mention (after commissions & losses) Closed out profitable trades for August per 100 shares per mention (after commission)
IR (short) $294 OSK (short) $187 NTES (short) $220 NFLX (short) $479 NFLX (short) $473 NFLX (long) $2 AMZN (short) $98 NTES (short) $69 Closed positions with increase in equity above last months close.
ORCL (short) $249 Total Profit for August, per 100 shares and after commissions $3264 Closed out losing trades for August per 100 shares of each mention (including commission)
SNDA (short) $108
BA (short) $113 MMM (short) $37 AMZN (short) $145 RHT (long) $233 DD (long) $65 RIG (long) $116 VALE (long) $72 NFLX (short) $360 AMZN (short) $885 AMZN (short) $73 LVS (short) $127 SOHU (short) $103 Closed positions with decrease in equity below last months close.
AMZN (short) $123 Total Loss for August, per 100 shares, including commissions $3335 Open positions in profit per 100 shares per mention as of 8/31
NTES (short) $201 SOHU (short) $76 MSFT (short) $91 MMM (short) $1499 WFC (short) $129 Open positions with increase in equity above last months close. None $0 Total $1996 Open positions in loss per 100 shares per mention as of 8/31
NOK (long) $8
Open positions with decrease in equity below last months close. DCTH (long) $344 Total $352 Status of trades for month of August per 100 shares on each mention after losses and commission subtractions.
Profit of $1576
Status of account/portfolio for 2010, as of 8/31Profit of $18933 using 100 shares traded per mention.
NUAN has been under strong selling pressure since the earnings report came out on August 10th. Nonetheless, the stock has been unable to break decisively below the $15 level and with the indexes having shown some strength, it is likely that some short-covering will be seen this coming week. The stock has a big open gap between 17.31 and 15.67. It is likely the traders will attempt to get into the gap, though it is unlikely the gap will be closed as the stock would need some bullish news to accomplish that. Rallies up to the 200-day MA, currently at 16.10 are likely to be seen. It is therefore probable that the stock will trade for the next 4 weeks in a narrow trading range with 16.10 as the high and 15.00 as the low.
DCTH was able to generate a green close on Friday, above last week's close at 6.08 and give a successful retest of the recent weekly close low at 15.75 in the process. The stock does show an inside week this past week that leaves both the upside and the downside as possibilities for this week. Nonetheless, the stock shows a decent intra-week level of resistance at 6.35 from October of last year and if the stock can get above this past week's high at 6.34, it is likely to rally up to at least the 50-day MA, currently at 7.05. By the same token, if unable to get above 6.35, and the lows of the week at 5.80 are broken, a drop back down to 5.58/5.65 would likely occur. Having closed near the highs of the week on Friday at 6.25, the probabilities seem to favor the upside. NTES closed out the week at the important psychological support at $40 leaving questions unanswered as to the probabilities of where the stock is heading from here. By the same token, the trading seen in the stock has diminished and with little news due out this week, the probabilities favor some sideways action all week, with 41.66 as the high and 39.50 as the low. The stock is not likely to be affected by any action in the indexes. The daily chart shows a small possibility that a flag formation has been formed with a break above 40.82 possibly generating a rally up to $45. By the same token, the weekly chart does not support the flag and does show 41.66 to be a difficult resistance level to break. Nonetheless, it is important to keep the flag in mind because if 41.66 gets broken, the stock could go up to the flag objective. On the downside, a drop down to 39.50 is likely to be seen under any circumstance but if 39.33 gets broken, drops down to the gap at 38.29 would likely be seen. Probability favors nothing of consequence happening. NOK had a very bullish week having generated a key reversal with lower lows, higher highs, and a close above last week's close. In addition, the stock generated a successful retest of the 13-years weekly closing low at 8.25 with a green close after last week's close at 8.66. It must also be mentioned that on the daily chart, the stock generated a breakaway and runaway gap formation this past week with Wednesday's gap between 8.60 and 8.72 and Friday's gap between 9.06 and 9.11 and in the process giving a buy signal by closing above the previous high daily close at 9.12. All in all, this was Resistance will be decent at 9.73 (9.68 on a daily closing basis) and then up again at 9.91 where the 100-day MA is currently located. It is not expected at this time that the stock will get below 9.12 for the time being, or perhaps anymore. SOHU had a very strong week having confirmed a close above the 200-week MA as well as having broken above the previous high at 51.88 on Friday. It is important to note that no previous resistance is found until 53.66 is reached and even then that resistance is no more than decent. By the same token, it must be mentioned that both the 50 and 100 week MA's are currently at 52.30 and if those lines can hold any further advances, drops back down to test the 200-week MA, currently at $50 are likely to be seen. The chart has begun to turn bullish and it is now highly unlikely that without any negative news that the stock could get below 45.90 under any technical circumstances. Liquidation of shorts should be strongly considered, especially if the stock is able to close above 52.30. By the same token, any drop back down to $50 should now be used to close out the short positions. WFC was able to generate a bit of a rally this past week in conjunction with the rally in the indexes. Nonetheless, the banking industry continues to be one of the weakest in the market and it is not likely that much more upside will be seen, especially if the SPX is not able to get above 1115/1120. The stock has broken strong support levels that are not likely to be reversed unless the indexes can go substantially higher. As such, adding shorts can be considered. The stock does show a breakaway and runaway gap formation this past week and if able to establish itself on a daily closing basis above 26.00, it could generate further upside. The 50-day MA is currently at 26.25 and should be used to measure the strength of this rally. If the stock fails to get above that level it is likely to go back down, and if the runaway gap between 25.11 and 25.59 gets closed, drops back down to 23.68 to close the breakaway gap would likely ensue. FSLR, due to the strength in the indexes, was able to close on Friday above the 200-week MA, currently at 135.25. Nonetheless, the stock was unable to build on its early morning strength and in spite of the late rally in the indexes fell back to close $1.35 off of the highs and in the lower half of the days trading range. The stock shows strong resistance up at 139.90 and it continues to be unlikely that the stock will be able to break above that level and generate a buy signal. On a daily closing basis, the stock shows decent resistance at 137.90. Any red close any day this week, prior to a break above 139.90, will be seen as a successful retest of the $140 level and will likely bring in new and possibly aggressive selling. A close next Friday below Friday's close at 136.45, would be seen as a second successful retest of the 200-week MA, and also generate strong selling.
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1) DCTH - Averaged long at 6.263 (3 mentions). No stop loss at present. Stock closed on Friday at 6.25.
2) AMZN - Covered shorts at 131.95. Averaged short at 127.595. Loss on the trade of $871 per 100 shares (2 mentions) plus commissions.
3) FSLR - Shorted at 128.45. Covered short at 129.55. Loss on the trade of $110 per 100 shares plus commissions.
4) ORCL - Covered shorts at 22.29. Averaged short at 23.79. Profit on the trade of $300 per 100 shares (2 mentions) minus commissions.
5) AMZN - Shorted at 131.82. Covered shorts at 131.95. Loss on the trade of $13 plus commissions.
6) NTES - Shorted at 41.74. Stop loss as 42.53. Stock closed on Friday at 40.02.
7) MMM - Covered shorts at 82.91. Averaged short at 86.045. Profit on the trade of $$627 per 100 shares (2 mentions) minus commissions.
8) MSFT - Covered short at 23.84. Shorted at 24.38. Profit on the trade of $54 per 100 shares minus commissions.
9) SOHU - Shorted at 49.90 Averaged short at 48.90 (2 mentions). No stop loss at present. Stock closed on Friday at 51.91. .
10) LVS - Shorted at 30.19. Covered shorts at 30.72. Loss on the trade of $53 per 100 shares plus commissions.
11) NOK - Purchased at 8.64. Stop loss at 7.90. Stock closed on Friday at 9.25.
12) FSLR - Shorted at 134.99. Stop loss is at 140.40. Stock closed on Friday at 136.45.
13) WFC - Shorted at 24.84. No stop loss at present. Stock closed on Friday at 25.84.
14) MMM - Shorted at 81.69. Covered shorts at 82.91. Loss on the trade of $122 per 100 shares plus commissions.
15) NFLX - Shorted at 135.36. Covered shorts at 136.35. Loss on the trade of $99 per 100 shares plus commissions.
16) IR - Shorted at 34.20. Covered shorts at 34.86. Loss on the trade of $66 per 100 shares plus commissions.
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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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