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Issue #123 
May 17, 2009 | Newsletter
The newsletter with chart analysis for stocks and stock indexes |
Stock Indexes Analysis/Evaluation
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| A Correction is in Progress!
DOW Friday close at 8269
The DOW failed to follow through on the previous week's strong close and not only closed lower but was not even able to generate any higher intra-week action. With no additional help from economic reports or positive earnings, it soon became evident that even the bulls thought it was time for a correction to begin and the strong buying that had been evident for the previous 9 weeks, failed to make itself present.
Due to the fact that it was options expiration week, the DOW continued to see enough buying to prevent a strong profit taking binge from occurring. Nonetheless, as the week progressed, it became more evident that the buying was limited and the index ended up closing near the lows of the week and with expectations that further downside will be seen this coming week.
On a weekly closing basis, decent resistance will now be found at last week's close at 8575. Above that level there is no resistance of consequence until 9035 is reached. On a daily closing basis, very minor resistances are found at 8331, at 8469, and at 8512. Strong resistance will now be found at 8575. On a weekly closing basis, support is at 8046/8076. Below that, there is nothing until major support is found at 6627. On a daily closing basis, support is very minor at 8217 from the 20-day MA. Below that, there is no support until minor support is found at 8017. Decent to strong support is located down between 7920 and 7957 from 4 previous daily closes in that area, as well as from the 100-day MA.
It is evident the entire market, including the bulls, is expecting some kind of a correction to be seen. As such, it is not likely that strong buying will be seen until the index gets back down to the 8000 level, which must always be considered a strong psychological support. Drops down to that level are highly probable at this time. There are few reports this week and none of high consequence, it is therefore anticipated that the downside momentum the index began to gather will spill over to the market and generate further selling as the week progresses.
It is also important to note that on Friday, the DOW was unable to reach a minimum upside objective of 8406 (got up to 8394). That failure seems to show that next week it will probably be a down week all week. Rallies should start to find strong resistance at 8307 and with the index closing at 8268 on Friday, it will be difficult for the index to show much green this coming week. By the same token, this present correction is more about profit taking than it is about new shorts. The index is unlikely to see the kind of selling that would confirm that a top has been made, though the probabilities of such a top having been made will now begin to increase.
The action should be slow and gradual to the downside, much like what was seen this past week. Possible trading range for the week is 8307 to 7929.
NASDAQ Friday Close at 1680
This past week, the NASDAQ had its first lower weekly close in the last 9 weeks, thus showing that a top to this rally may have been found. It is important to note that the previous week the index had broken above a strong weekly close resistance at 1721 with a close at 1739. By closing lower this past week (below 1721) a failure-to-follow-through signal was given. Such a failure signal is likely to affect this particular index to a greater degree than any of the other indexes, and also likely to cause much of the selling to become concentrated in this index this coming week.
Since the middle of the week it was evident the NASDAQ was receiving the bulk of the selling as it was the only index that broke and closed below the 20-day MA this week. The break happened on Wednesday, and for the rest of the week the index was unable to rally or get above that line. With little support on the way down, it is probable the index will likely take the strongest fall this week.
On a weekly closing basis, resistance will now be very strong at last week's close at 1739, as well as at 1721. On a daily closing basis, there is decent resistance between 1689 and 1694, stronger at 1739, and very strong at 1764. On a weekly closing basis, there is no support until decent support at 1552 is reached. Below that level support is strong between 1476 and 1500 from a psychological basis as well as an important weekly close at 1476. On a daily closing basis, support is decent between 1645 and 1664. Below that there is minor support at 1608 and stronger between 1552 and 1562 from a previous daily low close of some consequence as well as from the 100-day MA.
Based on the action this past week, the NASDAQ will likely be heading almost straight down to the runaway gap area at 1599 - 1596. Nonetheless, the 1664 level is likely to be an important pivot point this week. That was the low of the week as well as an important previous high. As such, it is likely going to be used by the traders as "the" area to watch for signals as to what the indexes will be doing this week.
It is important to note that the NASDAQ has a breakaway gap at 1599-1596 and a breakaway gap at 1553-1559. The gap area will likely act as strong support and generate a bounce, perhaps back up to 1664. Nonetheless, if the first gap is closed the second will likely soon follow. Should that happen, it could mean that this correction in the indexes will be more than what is now being anticipated the first correction down will be.
Should the NASDAQ break below 1664, the drop down to the 1600 area should be swift. That is likely to be the most important note mentioned this week.
On the opposite end, should the index be able to close above 1739, then all this weakness will be negated and buyers should pour back in.
Probable trading range for the week is 1697 down to 1599.
S&Poors 500 Friday close at 882
The SPX closed lower this week, thus confirming that the weekly close resistance at 931 is strong and will be very difficult to break. The index also closed near the lows of the week thus providing a strong likelihood that lower lows will be seen this coming week.
With declines in financial stocks leading the way, the beginning of a corrective phase is now likely. Capital raises for many of the bank stocks, to fulfill the requirements of the stress tests, will be diluting the value of the stocks. As such, it is unlikely that the index will be able to generate any kind of a strong rally until those requirements are fulfilled.
On a weekly closing basis, resistance is now very strong at 931, as a double top at that level has now been formed. Above that level resistance is non-existent until 968. On a daily closing basis, resistance is minor at 893, decent at 919, and very strong at 929. On a weekly closing basis, decent support will be found at 872/876, stronger at 825, and very strong at 800. Major support is down at 683.
It was evident from the beginning of the week that the SPX was going to be unable to generate any further upside, even though the index had closed on its highs the previous Friday. Announcements from several banks, as to the likelihood of additional stock offerings to raise capital, prevented buyers from being aggressive. Banking stocks began the fall starting on Monday, and the index was unable to generate any rallies of consequence thereafter.
On Friday, the index broke below the week's low at 882 and gave notice that further downside was to be expected. On an intra-day basis, minor support begins at 857 and gets stronger as it reaches 832-845. With no support of importance until those levels are reached, the probabilities of the index dropping at least 25 points the first part of the week are high. The main objective this week, or at the latest next week, will be the 100-day MA which is currently trading down at 831.
The SPX was unable to generate any kind of a higher daily high than the previous day, all this past week. Such action means the buyers have lost their edge and that until some decent support is found, they are not likely to be able to change that trend. Likely trading range for the week will be 882-832.
It is now likely that a short-term top to the 9-week rally has been found. The bulls will now likely cash in on the profits they obtained over that period of time and wait for the market to give them notice as to where new buying interest will be seen, before they become aggressive again. In addition, most of the earnings reports of consequence are now out and the bulls will not be able to rely on better-than-expected news in that sector until the new quarter comes around.
With the fact that both the bulls and the bears are now expecting to see a correction, it seems difficult to think that a rally of consequence could occur. In addition, much of a recovery in the economy has already been factored in, and the risk of negative surprises to those anticipatory numbers is now creeping back in to the market.
It also must be mentioned that all three indexes now seem to be on the same page and with the same agenda. Such agreement of purpose will take away the diversity of objectives that has been the norm, and some of the problem, while the market recovered. As such, all three indexes will now likely get back to working in unison to accomplish a common goal, of finding out where the support levels of consequence are now located.
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Stock Analysis/Evaluation
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CHART Outlooks
It is highly likely that the overall market will be heading lower over the next week or two. As such, only short positions will be mentioned. Nonetheless, many stocks already began to go down this past week and good risk/reward ratios have been difficult to find. The stocks mentioned below are some of the stocks that still offer good risk/reward.
AIPC (Friday close at 28.18)
AIPC is a stock that languished between $4 and $11 for the better part of 3 years during 2005 and 2008. In June 2008, the stock broke out of its trading range and had a meteoric rise from $11 all the way up to $35, during a time the rest of the market was going down sharply. A very similar situation happened back during the last recession in 2002-2002 when the stock rallied from a low of 15.00 to a high of 52.50, while the DOW dropped from 11207 to 9261. Evidently, the thought is that people eat more pasta during recessions.
Even though it has been shown that during the last 2 recessionary periods AIPC rallied "against" the indexes, it must also be mentioned that in 2002, after the indexes had rallied from their lows and a retest was occurring, the stock took a sharp fall as well. There are several reasons to believe the same thing may be happening now.
On a weekly closing basis, resistance is decent to strong at 30.77, strong at 34.24 and major at 35.15. On a daily closing basis, resistance is strong at 28.60 from the 100-day MA the stock broke last week. Above that, resistance is psychologically strong at $30 and strong again at 31.98. On a weekly closing basis, there is no support until minor support is reached at 23.62 and then again at 22.10. Strong psychological support, as well as the 50-week MA, is found down at $20. On a daily closing basis, there is decent to strong support at 25.00 , minor support at 23.15, and stronger down between 21.43 and 21.68. very minor support at 23.40 and strong support down at 21.04. Below that level there is minor support at 19.02 and strong support from the 200-day MA at 15.52.
It must be mentioned that the strong rally that was seen during 2000-2004, from 15.00 to $52.56, came to a sudden stop when the stock gapped down the week of April 12th 2004 from 37.64 and 35.51. That gap was the pre-cursor of a drop all the way down to $3 over the next 22 months. So it must be noted that the recent rally that started from $11 seems to have been capped with a successful re-test of that original gap, when the stock rallied up to 35.73. The failure to close that gap after the strong rally, seems to suggest that AIPC may have seen its major top for the next few months, if not years.
In addition, the stock gapped up from 26.94 to 29.40 in February and just last Tuesday gapped down from 30.01 to 29.57. Such a formation could signal that the entire period the stock traded between $30 and $35 is an island and that $30 will not be seen again. As such, if that is the case, drops back down to the psychological support at $20, and perhaps even down to test the breakout area at $11 are now possible and even likely.
On Friday, the stock rallied in an attempt to test the gap left on Tuesday, but the stock failed to even get close to 29.57, as the 100-day MA, currently at 28.68, prevented that from happening. If the stock is unable to get above the 100-day MA this week, the disappointment will likely be strong, and selling will increase. With minor supports below, a failed attempt to close the original gap, a possible island formation, and trading below the 100-day MA, in addition to a less-than-expected earnings report, AIPC seems to be a great short.
Sales of AIPC between Friday's closing price of 28.18 and up to 28.68 (100-day MA) and using a stop loss at 30.00 and having an objective of a drop down to 20.00, will offer at least a 4-1 risk/reward ratio.
My rating on the trade is a 4.5 (on a scale of 1-5 with the strongest probability rating being 5).
RIMM (Friday close at 72.34)
RIMM, after building a strong double bottom on the weekly chart at the $35 level, began rallying 10 weeks ago. The stock received a much better than anticipated earnings report 6 weeks ago and increased its upward momentum, to the point that the stock sliced through a major resistance level up at 60.47 and rallied all the way up to the next resistance at $78. The rally has been partially caused by the double bottom, the positive earnings report, and help from the index rally as well.
Nonetheless, the stock has reached a very strong resistance level, is overbought, and has rallied straight up over $43 (more than doubled in price) without any kind of meaningful correction, or support building action. As such, the stock is likely to be in a corrective phase with strong probabilities of seeing downward movement.
On a weekly closing basis, resistance is decent to strong at 76,84, from a previous close at that level, and also at 74.00 from the 50-week MA. On a daily closing basis, resistance is minor at 73.77 and very strong at 77.07. On a weekly closing basis, support is decent at 69.00 and then nothing until the previous breakout level, as well as 200-week MA, down at 59.80. On a daily closing basis, support is decent at the most recent low close at 69.09, minor at 66.79, and decent to strong between 63.77 to 63.97 from two previous high daily closes of some consequence as well as from the 200-day MA. Further support will be found at 59.95 from a previous minor low close as well as from the 50-day MA.
RIMM left a major gap open last September when the stock gapped down between 96.66 and 77.75. The recent rally momentum, because of the lack of resistance above 60.47, took the stock up into the gap and up to a previous intra-day high of some consequence seen on Jul07 at 78.66 with a rally up to 78.20. Nonetheless, it seems unlikely that under the present economic conditions, that further upside will be seen at this time, especially since the gap area must be considered major resistance.
This past week, due to a round of profit taking, the stock backed off substantially and dropped down close to $10 from the highs. On Friday, likely due to some short-covering as well as a retest of the recent highs, the stock saw a sharp one-day rally occur. Nonetheless, the stock seems to have found a top to this rally and further drops are likely to be seen over the coming weeks, looking to test the supports in the chart as well as build a support base from which to attempt higher numbers later on.
On Friday the stock rallied up and above the previous weekly high close at 73.77, attempting to keep the upward momentum going, but by the end of the day it was unable to generate a close above it. By closing lower on Friday, the weekly chart generated a successful retest of the 50-week MA as well as gave notice that further upside at this time will be difficult to achieve. The rally back up to 74.27 will also be considered a successful retest of the highs if the stock gets below Friday's low at 71.02. It is evident that if the stock is in a corrective phase, that the low seen on the week of August 13th 2007 at 61.54 will be tested, In addition, the breakout level at 60.47 must also be considered a high likely target of a correction.
Sales of RIMM between Friday's closing price of 72.34 and 72.90 and placing a sensitive stop loss at 74.31 and having an objective of 61.54, will offer a 6-1 risk/reward ratio. If stopped out, sales should be re-attempted above 75.56 with a stop loss at 78.30.
My rating on the trade is a 4 (on a scale of 1-5 with the strongest probability rating being 5).
NTES (Friday close at 30.45)
NTES got on a tear to the upside staring in the second week of January when the stock tested successfully the previous weekly closing low at 15.90 (15.00 on an intra-day basis) with a weekly close at 17.54 (16.61 on an intra-day basis). Since that time, the stock has almost doubled in price with a high made just two weeks ago at 32.65. In the process, the stock made new all-time highs getting above the previous all-time high at 27.16. The stock rally was helped by an increase of interest in the online gaming industry during the past few months.
Nonetheless, the stock has not yet had any kind of a correction or even a retest of the breakout level, and over the past couple of weeks the action seems to suggest that a temporary top to this rally has been found.
On a weekly closing basis, resistance is decent at 30.93 from a recent double top formed at that price. On a daily closing basis, resistance is decent to strong at 30.93, minor at 31.18, and strong at 32.01. On a weekly closing basis, support is minor to decent at 29.97, and then nothing until minor to decent support is found at the previous high weekly close at 26.81. Below that, there is no support at all until the 50-week MA is reached at 22.45. On a daily closing basis, support is minor to decent 29.97 from a minor daily close at that price, as well as from a psychological basis. Minor support also at 29.66 and a bit stronger at 28.92. Below that, there is a minor support at 27.43 as well as the 50-day MA.
Two weeks ago, NTES rallied intra-day, two days in a row, to the 32.65 level. Nonetheless, the highest close on both days was 32.01. Since those two days, the stock has not even been able to get intra-day to 32.00. Such action seems to suggest that a spike high was made on that occasion. In addition, the stock reached the $30 level 4 weeks ago and since that time the stock has been unable to establish any further upside.
It is likely that a top has been formed and with the indexes likely to be in a corrective phase, the probabilities of NTES getting down to at least the previous all time high at $27 is high. Nonetheless, with a stock that has doubled in price without any strong correction, the possibility of further downside than the previous high, exists.
Sales of NTES between 30.65 and 30.92, and placing a stop loss at 31.70 (10 ticks above the most recent intra-day high) and having an objective of a drop down to at least the 26.81 level, will offer a risk/reward ratio of 4-1.
My rating on the trade is a 3 (on a scale of 1-5 with the strongest probability rating being 5).
SOHU (Friday closing price at 52.58)
SOHU, over the past 8 weeks and in conjunction with the rally in the indexes, has generated a rally from a low of 38.25 to a high of 60.25, seen two weeks ago. Since September of last year, the $60 has proven to be a very strong resistance level, and on this past occasion it proved to be so, as the stock fell back almost immediately after reaching it.
From Nov08 through Apr09, SOHU traded consistently in a trading range between $40 and $50. It is now highly likely that the stock will be testing the top of that trading range to see if the previous resistance can now be considered support.
On a weekly closing basis, resistance is decent at 54.94 and very strong at the most recent high weekly close, as well as 50-week MA, at 56.75. On a daily closing basis, resistance is decent at 55.32 and strong at 57.55. On a weekly closing basis, support is minor at the 100-week MA at 51.81, and very strong down between 48.43 and 49.40, from 4 different high weekly closes of consequence in that area. On a daily closing basis, minor to decent support is found between 50.90 (minor daily close) and 51.41 (200-day MA). Stronger support will be found at 47.93 where a previous daily low close of some consequence, as well as the 50-day MA is seen. On an intra-day basis, support is decent to strong between 46.97 and 47.03.
The trade in SOHU is a fast in and out trying to take advantage of what is likely to happen to the indexes as well as take advantage of a small chart formation that has been built in the stock over this past week. On Wednesday, the stock gapped down from 53.72 to 53.24 and on Thursday the stock followed through to the downside but ended up having a reversal day and an attempt to close the gap. Nonetheless, the stock ran up against a previous intra-day high of consequence at 53.49 and was only able to generate a rally up to 53.50. On Friday, the stock should have been able to generate at least a close of the gap when the indexes rallied, but the stock failed to do so and ended up having an inside day and a red close.
If the indexes are heading lower this week, as anticipated, the failure to close the gap could generate further weakness and cause the stock to move sharply down to the psychological support at $50. If nothing else, the gap offers a clearly defined stop loss point. In addition, the probabilities of the stock getting back down to the $48-$50 are high, due to the probable retest of the 3 months trading range the stock was in the first part of the year.
Sales of SOHU between Friday's close of 52.58 and 52.91 and placing a stop loss at 53.60 and having an objective of a drop down to the $47.04 level, will offer a risk/reward ratio of 5-1.
My rating on the trade is a 3 (on a scale of 1-5 with the strongest probability rating being 5).
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Updates
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| Updates on Held Stocks
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Open Positions and stop loss changes
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| NUAN gave notice this past week that, like the indexes, it too seems to have reached a temporary top. The stock had a bullish earnings report, two important upgrades, and an agreement of purpose with several large multinational companies that should have generated strong buying, it didn't. The stock fell and gave notice that further upside at this moment in not likely. On Thursday the stock dropped down to the 50-day MA at 11.80 and by Friday, by closing in the green, the stock gave a sign the retest was successful. In addition, on Friday the stock was able to close just above the 50-week MA currently at 12.27, as well as just barely below the 200-week MA at 12.64. Nonetheless, Thursday was a classic reversal day to the downside and now the high of that day at 12.83 will be strong resistance. If the indexes are down this week, as anticipated, it is likely the stock will see more weakness and drop down to the previous breakout highs at 11.27 as well as to the 200-day MA at the same price. Such a drop would also be a retest of the 20-week MA. At this moment, the only support of consequence the stock has are the weekly MA's (50 and 200) and since those are only valid on a Friday, the likelihood of the stock dropping down, intra-week, to the 11.27 area is high. Any intra-day rally and close above 12.83 would be positive. NTES, with the red close this week, has now built a double top on the weekly closing chart at 30.93. Nonetheless, the stock was unable to give a sell signal when it was able to keep itself above the most recent low weekly close at 29.97. In addition, on the daily chart, the stock was also able to close out the week without breaking the 20-day MA at 30.45. Nonetheless, on the daily close chart, the break above the previous daily high close at 30.91 was negated when the stock closed below that level on Friday. Another close on Monday below 30.91 will likely generate further downside. On an intra-day basis, the stock has an important support at 29.80 and on a daily closing basis, at 29.66. A break and a close below those two levels will likely generate a strong profit-taking binge, likely taking the stock back down to test the original breakout level, on both the daily and weekly chart, at $27. It must also be mentioned that the stock seems to have built a head & shoulders formation that if the neckline is broken (a break below 29.80) would give an objective of 26.95. A close above 30.91 would negate the formation and likely generate new buying. KGC continues to trade in a sideways fashion without being able to generate a breakout or a breakdown. The 17.40 level (100-week MA), on a weekly closing basis, continues to be strong resistance. The stock tried on several occasions to generate movement above that level but failed. Nonetheless, the failures have not generated new selling and therefore the stock seems to be on hold waiting for further news before making any decisions. The 16.31 level, on a daily closing basis, seems to have some meaning as a close below that level could generate a move back down to 15.50. By the same token, any daily close above 17.32, would generate further upside. RIMM closed in the red this week and made last week's close at 73.77 into a successful retest of the 50-week MA. In addition, it could also be a signal that a corrective phase has begun as the stock had moved up without a correction for 9 straight weeks. The stock was successful this past week in closing an open gap between 69.73 and 70.25 and on Friday generated a move up above $74 while attempting to continue the weekly up-trend (a close above 73.77). It seems the stock failed to accomplish the goals of the bulls and now the stock is likely to go down in conjunction with the indexes. On a weekly closing basis, there is minor to decent support at 69.00. On a daily closing basis, support is also decent at 69.09. Nonetheless, any daily close below 69.09 will likely take the stock down to test the 200-day MA currently at 63.90. On the weekly chart, though, any weekly close below 69.00 will likely take the stock down to test the breakout area, as well as 200-week MA, at 59.78. SNDA managed to close higher this past week than the previous week making the previous week's close at 47.22 into a support. Nonetheless, the higher close this week, if the stock closes lower next Friday, will be seen as a successful re-test of the 50.30 weekly high close, especially if a close below 47.22 is generated. The stock has now done all of the top building formation needed, and a close below 48.41 any day this week, could be the catalyst for lower levels. Support is decent to strong at 47.22 and the minor to decent at 44.46, 44.77, and at 46.31. The stock did begin to show signs that it is weakening when it was able to go below a previous intra-day low of consequence at 46.52 with a drop on Thursday to 46.19. The signs are there for further weakness this week, especially with Friday's option expiration day weakness. Drops down to the lowest low of the last 6 weeks at 44.26, as well as the 50-day MA at 43.80 are now possible and perhaps even probable. A daily close above 51.41 would be a strong positive. WFC, with the red close this week, showed that last week's close at 28.18 was a successful retest of the 100-week MA. In addition, the stock closed on Friday below a decent weekly close support at 25.48 as well as slightly below the 50-week MA at 25.00, giving notice that further downside is probable. There are two other weekly close supports of some consequence at 23.00 and at 21.76 that will likely be objectives this coming week. With Friday's red close below Thursday's close at 25.69, it might be said that 25.69 was a successful retest of the daily high close at 28.18. If that is the case and the stock is able to close below the most recent daily close support at 24.20, it can be said the weakness in the stock will likely be more than was previously thought. Supports on the daily close chart are almost the same as the weekly chart with 23.41 and 21.76 being the two most important. Nonetheless, a close below 21.76 could generate a move back down to the 100-day MA at 18.63. With the company having to raise close to $14 billion dollars through a stock offering, likely to be sold around 20.50-21.50, the possibilities of this stock getting below $20 is real. WDC, with the red close this week, was able to make last week's close at 23.71 into a successful retest of the 100-week MA. The stock does not have a very weak looking chart and therefore, at this time, the downside will be somewhat labored. Nonetheless, a close below the most recent daily low close at 22.36 will begin to weaken the chart. Below that level, on the weekly closing chart, the stock has good support at 21.17 from a previous weekly low close and at 20.91 from the 200-week MA. In addition, the stock has a total of 4 previous daily closes of consequence between 21.04 and 21.16 that makes that support level very strong. The probabilities are high, though, that a drop down to that support will be seen. The question will then be whether that support will hold up or not. A break of the support down at $21 will likely take the stock down to test the previous breakout level at 17.87. At that price is also where the 20-week MA is currently at. A short-term key will be 23.48. If the stock is able to get above that level, a rally up to 24.40 will become probable. A weekly close above 23.71 would be bullish. On the downside, the 21.85 intra-day level could be a key. Drops below that level could be the catalyst that takes the stock down to test the 200-day MA at 18.25. BA gave a failure-to-follow-through signal when the stock failed to generate further upside after the stock last week had broken above a previous high weekly close at 45.25 with a close at 45.83. The close at 43.00 this week must be considered a negative that will likely generate a move back down to the $40 level to test the support there. In addition, the stock this past week tested the 200-day MA successfully when it closed at 45.85 and then closed lower. Very minor support at 42.95 and then nothing of consequence until the 38.84-40.00 level is reached. Drops down to the $39-$40 are highly probable. A close above 45.85 would be a positive. AIPC had a less than expected earnings report this week and the stock generated a classic reversal with higher highs, lower lows, and a close below the previous week's low. In addition, the stock broke below the 100-day MA in the process and proceeded to test that line on Friday with a rally up to 28.55. The stock did gap down in the process between 29.57 and 30.00 and therefore that gap will now be seen as strong resistance. Closure of the gap would be a positive. The stock did close on Friday below a previous weekly low close of consequence at 28.73 and with that close gave a sell signal that will only be negated if the stock closes above that level next week. Support will be found at the most recent low daily close at 25.95 but below that there is no support until minor support is reached at 23.15. Objectives on the downside could be the 200-day MA at 21.59. In addition, there are two previous daily low closes at 21.43 and at 21.62 that will add to the strength of that support. If that level is broken, next objective would be 50-week MA and psychological support at $20. HPQ held up well this week and showed that the support at 34.75, on a weekly closing basis, is decent. The stock will have its earnings report after Tuesday's close and it is unlikely the stock will do much until that report comes out. Rallies up to 36.87 are possible if the indexes don't go down at the beginning of the week. It is evident that the $35 level is a very important pivot point for the stock, as well as support and resistance. On an intra-day basis, drops down to 33.75 are certainly possible, and even probable on Monday or Tuesday, if the indexes show weakness. Nonetheless, the chart is not compelling enough to stay in for the earnings report unless the stock is able get below and close below 33.34. Downside objective at most, is 30.00-30.46. I will be looking to take profits on the short position put on Friday on dips below $34 or likely at any higher price before Tuesday's close. EBAY was able to confirm on Friday that Wednesday's test of the 200-day MA was successful. Nonetheless, the stock was also unable to generate any further upside and maintained itself below two important daily close resistances at 17.15 and 17.38. The stock seems to be waiting to see what the indexes are going to do before making any decisions. The good thing is that the parameters of this trade are clearly defined. Any daily close above 17.38 would be considered a positive, while a close below 16.17 a negative. Friday's action was more positive than negative and I would have to say the stock is leaning toward the upside. This trade is not looking as good as it did on Friday when I put it on. Nonetheless, if the indexes go down, the stock will likely go down as well. Stop loss should be at 17.72 but if the indexes go down on Monday and the stock is not able to generate moves down to the 16.17 level, I may just scratch the trade and get out.
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1) HPQ - Shorted at 35.66. Stop loss at 36.97. Stock closed on Friday at 35.01.
2) KGC - Averaged long at 15.96 (5 mentions). No stop loss at present. Stock closed on Friday at 16.89.
3) TRA - Shorted at 26.91. Covered shorts at 28.54. Loss on the trade of $163 per 100 shares plus commissions.
4) EBAY - Shorted at 17.03. Stop loss at 17.72. Stock closed on Friday at 16.91.
5) AIPC - Shorted at 28.50. Stop loss at 30.00. Stock closed on Friday at 28.18.
6) WDC - Shorted at 23.13. Stop loss at 23.58. Stock closed on Friday at 23.16.
8) RIMM - Shorted at 71.67 and again at 72.82. Averaged short at 72.245. Stop loss is at 74.31. Stock closed on Friday at 72.34.
9) NTES - Averaged short at 30.18. No stop loss at present. Stock closed on Friday at 30.45.
10) SNDA - Shorted at 49.36. Covered short at 49.80. Loss on the trade of $44 per 100 shares plus commissions.
12) AMZN - Covered short at 76.94. Shorted at 82.12. Profit on the trade of $518 per 100 shares minus commissions.
13) WDC - Shorted at 22.13. Covered short at 22.83. Loss on the trade of $70 per 100 shares plus commissions.
16) SNDA - Covered short at 46.95. Averaged short at 52.615. Profit on the trade of $1133 per 100 shares (2 mentions) minus commissions.
17) RIMM - Covered short at 69.23. Shorted at 76.37. Profit on the trade of $714 per 100 shares minus commissions.
18) WFC - Shorted at 28.30. No stop loss at present. Stock closed on Friday at 24.87.
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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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