At this time, good risk/reward ratios can only be found in short positions with stocks that are at or very close to strong resistance levels. All mentions this week are in stocks that have very low risk ratios, and a high degree of probability of success.

SNDA (Friday close at 50.20)

SNDA is a Chinese online gaming stock that just 4 weeks ago made a new all-time high rallying over 30% above its previous high. The Chinese online gaming industry has been in strong demand and new all-time highs have been made across the board. In the process, the median objective ($50) of the 23 analysts currently covering the stock was surpassed.

In the last 3 weeks, the stock has received 2 downgrades and one sell recommendation. In addition, after having reached its rally high at 53.86, the stock has been showing a topping out formation that could be fulfilled this coming week.

On a weekly closing basis, resistance has not yet been determined, as the stock has continued to move higher without any weekly close corrections. On a daily closing basis, The stock shows decent resistance at 52.18 and strong resistance at 53.75. On a weekly closing basis, there is no support until minor to decent support is found at the previous breakout high of 39.64. On a daily closing basis, there is minor support at 47.83, decent to strong support at 46.11, and decent support again at 44.46. Below that there is no support until the previous high daily close, as well as 50-day MA, is reached down at 39.86.

When SNDA was able to close above the previous 18-month high close at 39.86, the buying increased and the bears panicked out of their short positions. In a manner of just 10 trading days, the stock shot up over 30% in value from a high of 41.30 to the now all-time high at 53.86. After that high was made, though, the stock corrected back down over $9 (18% correction) in just 2 days, and since then the stock has been attempting to go back up to retest the highs.

It is important to note that the stock left an open gap between 40.86 and 41.30 that is likely to become a magnet if a temporary top has been found. Drops down to test the breakout area at $40 are probable. Before that happens, though, a retest of the highs is likely. Two days prior to the high at 53.86 being made, the stock rallied up to 52.44. A rally up to that level is probable and could be used as a successful retest of the highs.

The stock has not had a weekly correction of consequence since January 19th when the rally began from a weekly close of 27.75. In fact, during the last 6 weeks, there has not even been a minor correction, on a weekly closing basis, to the rally. If the retest of the highs is successful, drops down to test the breakout area are highly probable.

Sales of SNDA between 52.18 and 52.77 with a stop loss at 53.96 and an objective of 39.86 will offer a risk/reward ratio of 7-1.

My rating on the trade is a 3.5 (on a scale of 1-5 with the strongest probability rating being 5).

INTC (Friday close at 15.81)

INTC is a stock that in conjunction with the indexes was been able to generate a short-covering rally over the last 9 weeks. Nonetheless, the stock is presently trading at a very strong resistance level that should not be broken unless some positive fundamental news comes out. In addition, it is a stock that has not yet had any kind of a retest of the recent lows and if unable to generate further upside, would likely get into a corrective phase to test the recent lows.

In addition, INTC has been in a very well defined trading range between $12 and $16 since October of last year. At this time, there does not seem to be any reason to think the stock will get out of that trading range unless the indexes generate much more of a rally.

On a weekly closing basis, resistance is very strong at 15.98/16.03 from a double top that exists there. Above that level there is no resistance until the 50-week MA, as well as 2 previous low weekly closes of consequence are reached up at 17.15. On a daily closing basis, there is strong resistance at 16.01, and very strong between 16.26 and 16.37, from a previous high close of consequence as well as from the 200-day MA. On a weekly closing basis, support is decent at 14.28 from a previous weekly low close of some consequence, as well as from the 20-week MA. Strong support is found at 12.05 from a double bottom at that price. On a daily closing basis, support is strong at 15.00 and again at 14.25. Below that level, strong support is found at 12.82/12.90, and major at 12.08-12.28.

During the last 6 weeks, INTC has been trading between a high of 16.39 and a low of 14.90, without being able to establish any kind of a trend other than a sideways one. With the rally in the indexes this past week, the stock should have been able to do something extra positive, but the results have been the same. The 200-day MA has been coming down and the stock is now within 50 points of that line, giving the entire area added resistance strength. If the indexes are unable to generate a breakout this week, it is likely that the INTC bulls will be disappointed and a correction to test the lows could occur.

INTC is presently showing a double bottom at $12, as well as a double top at $16. The double top is in the process of being tested this week as the stock closed on Friday at 15.81. If the stock generates a lower close next Friday, the double top will have been tested successfully. Such an event would likely be reversed for the next couple of weeks and the double bottom would receive the same kind of action, a retest.

Sales of INTC between 16.00 and 16.07 and placing a stop loss at 16.59 and having an objective of 12.50 would offer a risk/reward ratio of 6-1.

My rating on the trade is a 3.5 (on a scale of 1-5 with the strongest probability rating being 5).

HPQ (Friday close at 37.17)

HPQ is yet another stock that made new 3-year lows 8 weeks ago and has rallied straight up without any kind of a retest of the lows. It is also a stock that 2 weeks ago began reaching a level of very strong resistance and has since been unable to extend its rally in a significant way, thus giving signs that the upside may have been exhausted.

The stock finds itself in an overbought condition that without fundamental help or further rallies from the indexes will likely be unable to generate a break of the resistance levels it faces. In addition, the bulls now find themselves with a small profit potential but high risk. As such, the probabilities for a correction at this point are high.

On a weekly closing basis, resistance is decent to strong at 36.85, strong at 37.49 and very strong at 38.80 from the 50-week MA as well as several high and low weekly closes between 38.28 and 38.67. On a daily closing basis, resistance is decent at 36.60 and strong at 37.41, from a previous daily close of consequence, as well as from the 200-day MA. Above that level, resistance is major at 39.31. On a weekly closing basis, support is decent at 34.75, and a bit strong down at 33.53. Below that level, support is decent at 32.44, and strong at 30.46. On a daily closing basis, support is decent to strong at 34.68, strong at 33.34, and then nothing of consequence until decent support is found at 31.18 and strong support at 29.34.

Resistance on the intra-week chart is very strong between 37.19 and 37.72 as those highs have been seen on 4 different occasions since December. The area received added resistance strength when the 200-day MA got down to 37.45 last Thursday and was tested successfully. The stock immediately backed off, close to $2, after having reached that level. It is likely that the stock will try once more to test the 200-day MA as well as the strong resistance there. Nonetheless, any failure to break out will likely take the stock back down to $34 in a short period of time. A break of the $34 would likely start a strong correction to test the lows made 9 weeks ago.

It must be mentioned that even if the stock is successful in breaking above the resistance level mentioned, the weekly close resistance up between 38.80 and 39.75 is even stronger. At 38.80 the 50 and 200 week MA's are located and the two highest weekly closes since the October break are at 38.28 and at 39.75. As such, this is a stock that has a high degree of probability of failure somewhere in this area.

With no retest of the lows, an overbought condition, and strong resistance, the probabilities are high of lower prices being seen over the next few weeks. The stock does show good support between $34 and $34.75, nonetheless, if that level is broken, drops down to the $30.50 to $32.50 are highly likely.

Sales of HPQ between 36.87 and 37.00 and using a mental stop loss at 37.82 and having a minimum objective of 33.53 will offer a 4-1 risk/reward ratio.

My rating on the trade is a 4 (on a scale of 1-5 with the strongest probability rating being 5).

AMTD (Friday closing price at 16.04)

AMTD, like with so many other stocks, has been in a strong up-trend during the last 9 weeks. In addition, since the stock does show a successful retest of the lows in March, the stock was able to break above a previous resistance level of consequence and generate a rally that counteracted many of the negatives that were created during the fall of the market.

Nonetheless, 3 weeks ago AMTD reached the 100-week MA and that lines seems to have stopped the stock on its tracks. In addition, the 9-week rally from the low of the successful retest, has not had any correction whatsoever and if the indexes are in the process of topping out short-term, it is highly likely the stock will see a correction to the recent move up.

On a weekly closing basis, resistance is strong between 15.99 and 16.34. At those prices there are two previous weekly low closes of consequence as well as the most recent high weekly close seen 2 weeks ago Friday at 16.34. On a daily closing basis, there is decent resistance at 16.69 and strong resistance at 16.80 from a double top recently built at that price. Above that level, there is additional decent resistance at 17.55. On a weekly closing basis, support is decent at 14.88 from a previous low close of some consequence as well as from the $15 psychological support. Below that level, strong support is found at 13.83. On a daily closing basis, support is strong at 15.15 from a double bottom at that price, as well as at 15.00 psychologically. Below that, there is no support until 13.83 is reached. At that level there is a previous low close as well as the 50-day MA. Additional support is located at 13.32 from the 100-day MA.

Since AMTD reached the 100-week MA at 17.00 it has had a lot of trouble continuing its recent up-trend. That same line was tested again this past week with a rally up to 16.88 and the stock was unable to generate any further upside in spite of new recent highs in the indexes. The stock has now built a double top, on the daily closing chart, at 16.80 and re-tested that resistance successfully with a close at 16.69. It seems likely that without any new catalyst, the stock is ready to retest the level the stock broke out of 6 weeks ago at $14.

The stock has moved up without any correction for the last 9 weeks and with last week's lower close, gave notice that it is likely the downside will now be explored for at least the next couple of weeks.

Sales of AMTD between 16.35 and 16.59 and using a stop loss at 17.10 and having an objective of 13.32, will offer a 4-1 risk/reward ratio.

My rating on the trade is a 3.5 (on a scale of 1-5 with the strongest probability rating being 5).