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Thursday - June 30, 2005

Energy, Rates and Stocks

By Arthur B. Hill - Thu 30-Jun-05 at 09:17AM in Indices
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Wednesday - June 29, 2005

Notable Charts 050629

BEAS - Bea Systems broke above falling price channel resistance with a surge in May. The stock consolidated in June and upside volume remained strong. Upside volume is clearly outpacing downside volume. The stock broke consolidation resistance on Tuesday. The first target is 12 and a move below 8 would be a bearish.

FL - Upside volume is picking up in Foot Locker. The stock formed a hammer on 20-June, surged above the blue trendline and gapped up on Tuesday. Further strength above 27.2 opens to the door to 30 and a move below 25.8 would be negative.

GOOG - Google was featured on 22-June with a falling flag breakout. The target then was above 300 and it has been hit. Watch the trendline extending up from mid April and 23-Jun low for signs of a trend reversal. This would also be a good time to close part of the position.

GYMB - GYMB surged above resistance with a high volume move in late May. The stock formed a falling wedge (bullish consolidation) and broke above the upper trendline on Tuesday. This signals a continuation higher and the first target is 16. Watch the late June low for signs of failure.

JP - Jefferson Pilot broke resistance with a surge at the end of April and then formed a bullish ascending triangle. The stock broke resistance at 51 to signal a continuation higher and target 55. Volume was a big low and traders should watch 50 for a failure.

NOVL - Despite bad earnings and a gap down in late May, NOVL firmed above its April-May lows. The stock surged in late May, formed a flat flag and moved sharply higher on Tuesday. You gotta like this price action. First target is 7.7 and a move below 6 would be bearish.

RX - Caremark fell sharply in June, but formed a higher low to keep the ascending triangle alive. More importantly, upside volume over the last eight days has been strong and a resistance breakout at 25 looks likely. Watch support at 23 for a failure.

SYNA - This stock continues to look good with its second high volume surge in June. The stock broke above the upper trendline and closed at its highest level of the month. A move below 19 negates this pattern and turns the outlook bearish.

WITS - Witness Systems broke falling price channel resistance with a strong move in June that featured good volume and gaps. This also shows good relative strength as the rest of the market was weak.

XRX - The cup is currently half full for Xerox. The stock broke falling price channel resistance with a good advance the last few weeks. The early June gap is holding and upside volume is has been outpacing downside volume. This is a bounce off support (12.5-13) that extends back to Jan-04. The upside target is 17-18 and traders should watch the gap low (13.29) for a failure.

BEAS, FL, GOOG , GYMB, JP, NOVL, RX, SYNA, WITS, XRX

By Arthur B. Hill - Wed 29-Jun-05 at 09:51AM in Stocks
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Thursday - June 23, 2005

Notable Charts 050623

CVG - It looks like a continuation lower for Convergys. The stock has a large head-and-shoulders reversal working, gapped lower in late April, stalled in June and declined on high volume yesterday.

IM - Ingram Micro surged in late April and broke trendline resistance. However, the stock returned all the way to support. There was another surge on good volume over the last two days and a run to resistance is in the cards.

INCY - Incyte, a biotech company, surged in early May, formed a falling flag and then broke resistance on good volume. This is still a bottom picking play and low priced stocks always have above average risk.

RMBS - Rambus cannot keep a bid. This company is not making any new products and pretty much lives on the hope of successful lawsuits. The stock gapped down two weeks ago, the gap remains and the stock recently broke trendline support.

SYNA - SYNA is coming alive for the second time this month. The stock bottomed in May, advanced on good volume in early June and bounced yesterday. Volume could have been higher.

By Arthur B. Hill - Thu 23-Jun-05 at 11:01AM in Stocks
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Wednesday - June 22, 2005

Notable Charts 060622

GOOG - The decline in Google looks like a falling flag correction within an ongoing uptrend. The breakout over the last few days is bullish and opens the door to another test of 300. Notice the long white candlestick and high volume on Monday. A move below Monday's low would negate the falling flag breakout and turn the chart bearish. The downside target would then be around 240-250.

DST - DST Systems broke falling price channel resistance with a strong high volume move in May and then corrected with a falling flag in June. The stock moved higher over the last two days with good volume and broke the upper trendline to signal a continuation higher.

CMCSA - After what looked like a triangle support break and bearish signal last Thursday, Comcast rebounded with good volume and broke above the upper triangle trendline. Upside volume has been stronger than downside volume the last two weeks and I am expecting higher prices. Watch support at 31.3 for proof otherwise.

CPO - Corn Products continues to bounce with good volume. The stock tanked in April, but firmed immediately and broke triangle resistance. Thes tock is breaking trendline resistance now and upside volume remains strong.

DV - Devry failed to partake in the May rally or follow through on the April gap. Thes tock formed a rising wedge/flag over the last few weeks and broke trendline support on Monday. Looks like a trend reversal and move into the teens.

By Arthur B. Hill - Wed 22-Jun-05 at 11:29AM in
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Tuesday - June 21, 2005

Notable Charts 050621

CDN - Cadence Design Sys broke rising wedge support, but firmed over the last few weeks with a trading range. The gap two days ago and resistance challenge are impressive. Watch for a move above 14.5 for a breakout and a move below 13.5 for serious weakness.

CL - Consumer Staple stock Colgate Palmolive got a gap and big bounce off support with good volume. This opens the door to a resistance challenge at 55 and it would take a move below 48 to turn bearish.

DDS - Dillards recovered after the big gap down, but upside volume was relatively light on the way up and volume has started to increase as the stock declined the last few days. Unless the stock can break above 26, I expect lower prices.

IPS - Ipsco has a lot of resistance just below 55 and recently gapped lower on high volume. As long as this gap remains unfilled, I will treat it as a bearish breakaway and expect lower prices as long as key resistance at 55 holds.

MMM - 3M holds an important key to the Dow. The stock has been consolidating the last few weeks. Watch 79.25 up and 75 down.

RCII - Rent-A-Center formed a triangle over the last few weeks and a move below 23 would signal a continuation of the prior decline.

RDWR - Radware recovered from a gap down and support break in late April. The stock advanced in the first part of May, but peaked in mid May and has underperformed the Nasdaq since mid May. Downside volume is starting to increase and this stock looks headed lower. A move above 24 would suggest otherwise.

TKR - Timken has a ton of support around 23 and surged over the last five days. Volume increased over the last two and the gap off support is bullish unless proven otherwise with a move below the June low. The upside target is 29-30.

By Arthur B. Hill - Tue 21-Jun-05 at 07:24AM in Stocks
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Monday - June 20, 2005

Notable Charts 050620

BVF - Biovail firmed in early May and then consolidated with a flat flag. The stock got a bounce last week, but volume was not that impressive and I would still like to see a close above 16.5 before turning bullish.

CTX - Centex formed a breakaway gap in mid May and surged to new highs in June. Friday's gap could be an exhaustion gap, but not until it is filled with a move below 69. A gap down and long black candlestick today would forge a most ominous candlestick reversal.

IBM - If the May rally is to continue, IBM needs to join in or lead with a breakout at 78. Otherwise…..

IMOS - Chipmost tech broke above the upper trendline of a falling price channel. The stock advanced five days straight and volume was above average. Hmmm…..

LLY - Lilly surged in April and broke resistance at 58 with good volume. The stock consolidated in May and formed a falling flag over the last four days. The trendline break is a start, but volume needs to increase to validate a continuation of the April surge.

LQI - La Quinta remains a strong stock within the consolidation. Notice how the stock gapped down at the end of May, firmed and then surged on good volume the last few days. A breakout at 9.5 looks imminent. Watch key support at 7.9 to turn bearish.

MLNM - Nothing like a little Mad Money to stir things up. However, On Balance Volume was strong even before Friday's Velcade announcement and Cramer's plug. Notice that OBV held above its March low when the stock tested its March low. By and large, upside volume has outpaced downside volume and this shows accumulation.

QCOM - QualCom is not helping the Nasdaq one bit. The stock broke double top support with a gap down in January, rallied back to broken support (now resistance) and the broke rising price channel support with a high volume decline over the last two weeks.

TER - Teradyne surged on good volume in May, consolidated with a falling flag in June and gapped higher on Friday. The stock even closed strong and upside volume was respectable. This opens the door to 16 with key support at 12.8.

ULBI - Ultralife Batteries was highlighted for its weak relatively performance and downtrend on 10-Jun. The stock has since broke below 16 and a trip to support around 10 looks in order.

WERN - Werner managed to firm after the gap down and then surged on big volume. The gap is looking like an exhaustion gap and a move above 20 would be bullish.

By Arthur B. Hill - Mon 20-Jun-05 at 09:45AM in Stocks
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Thursday - June 16, 2005

Dow Dulls

Looking at the Dow’s Bollinger Bands, I get the strange feeling that something is about to happen in this DULL trading range. The Bollinger Band width is at its lowest level in over 15 years as the Dow trades within a 170 point range the last 19 days. Such contractions usually precede an increase in volatility and lead to a significant breakout. Bollinger himself notes that there is often a head fake (false breakout) and then a good directional move in the opposite direction of the head fake. I am not smart enough to predict head fakes and will simply take the breaks as they come. A move above 10600 is bullish and opens the door to 11000, while a move below 10400 is bearish and opens the door to a break below 10000. INDU

By Arthur B. Hill - Thu 16-Jun-05 at 04:47PM in Indices
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Notable Charts 050616

***Bearish*** Air Products (APD) sports a bearish pattern. After the Mar-Apr decline, the stock formed a rising wedge that retraced (surprise, surprise) 62%. The pattern and the retracement are classic for corrective advances. The stock has stalled over the last few weeks and declined on high volume yesterday. A move below 59.8 would trigger a bear signal.

***Bullish*** US Steel (X) declined from 65 to 38 and found support in mid May. The stock caught my attention with a gap up and long white candlestick on good volume yesterday (green carets). The move broke trendline resistance and further strength above 42 would break the late May high.

By Arthur B. Hill - Thu 16-Jun-05 at 04:44PM in Stocks
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Wednesday - June 15, 2005

Notable Charts 050615

Stocks opened strong with a gap across the board, but strength fizzled in the first 10 minutes and the major indices dropped sharply the next hour and 20 minutes. With such a weak start on the day and a failed gap, I will post a few bearish charts today.

Good day and good trading.

The Bears

***Bearish*** Barr Labs (BRL) gapped down in early May on high volume and then formed a rising wedge with the advance back to 52. A big bad bearish engulfing formed last week and the stock gapped down on Tuesday. The downside target is 45-46 and a move above 52.1 would negate this signal.

***Bearish*** Joy Global (JOYG) met resistance just below 40 with a big bearish engulfing. This bearish candlestick reversal was confirmed with a break below the lower trendline of a rising wedge. A small flag formed over the last few days and a move below 34 would open the door to a support test at 30.

***Bearish*** Checkfree (CKFR) broke trendline support in mid April and bounced with a feeble advance back to 38 in mid May. The move formed a bearish rising wedge and the stock severely underperformed the Nasdaq in May. CKFR broke trendline support in late May and below its prior low with a sharp decline last week. A move to the low 30s is expected and a move back above 38 would negate this bearish forecast.

***Bearish*** Automatic Data Processing (ADP) was first featured on 1-Jun and the stock broke triangle support with good volume early last week. The break opens the door to a support test around 40.

***Bearish*** Priceline (PCLN) looks sick. The stock gapped lower in early May and the top of the gap acted as resistance. The stock failed to partake in the May advance and is on the verge of breaking the lower trendline of a rising wedge. The bear signal has already been given and a move below 22 opens the door to 18. Watch resistance at 25.5 to turn this chart positive.

By Arthur B. Hill - Wed 15-Jun-05 at 11:17AM in Stocks
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Tuesday - June 14, 2005

SPX and COMPQ

The pattern at work in the Nasdaq is clearly bullish. After a big advance (Aug-Dec), the index retraced 62% with a correction to around 1900. The correction formed a falling price channel and the May breakout signals a continuation of the Aug-Dec advance. A support zone has been established around 1950-2020 and it would take a move below this are to negate the breakout.

The battle of 1200 is raging. The S&P 500 retraced 62% of the Oct-Dec advance with a falling price channel. Despite the trendline break and support break at 1165, the index quickly recovered and the subsequent breakout at 1180 should be considered bullish until proven otherwise. The index has been consolidating the last four weeks. This should not be taken as a sign of weakness as long as support at 1190 holds.

By Arthur B. Hill - Tue 14-Jun-05 at 07:52AM in
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Monday - June 13, 2005

Notable Charts 050613

ALKS BOBE CPO DD FCS PFGC

(back to top)

By Arthur B. Hill - Mon 13-Jun-05 at 11:32AM in
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Friday - June 10, 2005

Notable Charts 050610

FDX IR LQI MDCO MHS
QCOM TK UCOMA ULBI UVN

By Arthur B. Hill - Fri 10-Jun-05 at 05:51AM in Stocks
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Thursday - June 09, 2005

Notable Sectors 050609

A lot depends on what the Consumer Discretionary SPDR (XLY) does. The stock has been consolidating for three weeks and formed a number of bearish candlestick reversals near resistance at 33.5. However, we have yet to see confirmation with a support break at 32.7. This would be the early bearish trigger and further weakness below 32 would bode ill for SPX.

Like the Consumer Discretionary SPDR (XLY), the Finance SPDR (XLF) has been consolidating for the last four weeks. The trading range comes near broken support and the 62% retracement mark, which make for a logical reversal spot. A move below 29 would be the early bear signal. Like XLY above, we should consider these bullish until at least the early bear signal.

With Software and Internet pulling back, I am watching the Semiconductors for signs of weakness. Should a third Nasdaq group join in on the weakness, the Nasdaq is likely to decline further. The Semiconductor HOLDRS (SMH) is trading near resistance and broke the steep trendline extending up from late April. The stock has been consolidating the last eight days with support at 34. Watch this level for early signs of weakness.

By Arthur B. Hill - Thu 09-Jun-05 at 04:16PM in Sectors
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Wednesday - June 08, 2005

Notable Charts 050608

Air Products formed a potentially bearish rising wedge over the last few weeks and two shooting stars over the last three days. A move below 59.8 would be bearish.

Alcoa has been plagued by lack of follow through and remains in a downtrend with downside volume above average. The stock surged in mid May and needs to break above 28.15 for a continuation higher.

Anheuser Busch (BUD) surged in April on news of Buffet’s buy. The stock has since consolidated and formed a triangle. A move above 48 breaks resistance and signals a continuation higher.

Andrx (ADRX) shows signs of accumulation with three high volume moves in the last six weeks. The stock broke trendline resistance in mid May and a move above 21.1 would be bullish.

Merrill Lynch (MER) declined sharply in Mar-Apr and then formed a rising flag (bearish). The stock has stalled over the last three weeks. Watch minor support at 54 for early signs of weakness and resistance at 56 for a breakout.

Maxtor (MXO) is part of a strong disk drive group and broke neckline resistance of a large inverse head-and-shoulders with expanding volume.

SPY formed a shooting star yesterday, but remains in an uptrend with waning upside momentum.

By Arthur B. Hill - Wed 08-Jun-05 at 05:44AM in Stocks
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Tuesday - June 07, 2005

Notable Charts 050607

AVP BOL CG CHB CNO
EMMS FDC IPCC JOYG MEDI RDA

By Arthur B. Hill - Tue 07-Jun-05 at 07:30AM in Stocks
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Monday - June 06, 2005

Notable Charts 050606

Major Indices

The Nasdaq 100 entered a resistance zone around 1550 and RSI is moving lower after becoming overbought.

The S&P 500 retraced a Fibonacci 62% of its prior decline and is meeting resistance around 1200. With both NDX and SPX near resistance, further upside looks limited.

Inter-market

The iShares ~20-year T-Bond Fund (TLT) formed a big bad bearish engulfing on Friday. This massive reversal could herald a consolidation or even a sharp trend change.

The US Dollar Index moved to the top of a rising price channel and has started to stall around 88. A move back to broken resistance around 85.5 is likely.

It is a classic for the CRB as the index retraced 62% with a falling price channel and broke above the upper trendline this last week.

The Gold ETF formed an island reversal last week and this is firmly bullish (short-term) as long as the gap holds.

Oil formed a falling wedge, broke the upper trendline and exceeded the prior high to turn bullish again. This is likely to benefit Energy stocks.

Sectors

The Consumer Discretionary SPDR (XLY) formed a rising flag and met resistance from broken support. A move below 32 would signal a continuation lower.

The Consumer Staples SPDR (XLP) formed a falling flag the last three weeks and a move above 23.6 would be bullish. Conversely, a move below the lower blue trendline would be negative.

The Energy SPDR (XLE) is following oil with a break above falling price channel resistance. Notice that prior to the breakout the stock retraced 62% of the prior advance and returned to broken resistance, which turned into support.

After a harami (Wed/Thu) last week, the Finance SPDR (XLF) weakened on Friday. The rising wedge is potentially bearish and traders should watch support at 29.

By Arthur B. Hill - Mon 06-Jun-05 at 06:56AM in Indices
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Friday - June 03, 2005

S&P Equal Weight

As its name implies, the Rydex Equal Weight S&P 500 Index (RSP) treats all component equal, regardless of market capitalization. This means that ExxonMobile (XOM). with market cap of $369 billion, counts the same as Teco Energy TE), which has a market cap of just $3.64 billion. This makes the index a good representation of the average Joe (Joe Stock that is).

RSP remains in a long-term uptrend and has yet to break down. The going is getting tougher, but momentum is still up overall on the weekly chart. First, the index broke resistance at 145 with a surge in Nov-04. This resistance level hounded the index most of 2004. Second, resistance turned into support with a successful test in Apr-05. Third, the trendline extending up from Aug-03 also confirmed this support level and the index remains near its all time highs.

Even thought the index has not made much head way over the past year, there is a clear upward bias on chart. Support at 145 holds the key. As long as this level holds, pundits can expect a trading range at worst and a move towards the upper trendline (170) at best. A move below 145 would turn the big trend down and be bearish for the broader market.

By Arthur B. Hill - Fri 03-Jun-05 at 04:44PM in Indices
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Notable Charts 050603

DD MSFT QCOM NOVL PFE FDC VIA.B

By Arthur B. Hill - Fri 03-Jun-05 at 04:41PM in Stocks
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Thursday - June 02, 2005

Notable Charts 050602

AIN, BLS, BMC, CNET, DPL, GIS, HRB, IBM, LGF, WSTL

By Arthur B. Hill - Thu 02-Jun-05 at 10:58AM in Stocks
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Wednesday - June 01, 2005

Notable Charts 050601

ADP ASPT CNP COHR EP
ICOS MDCC MHS MLHR STGS

By Arthur B. Hill - Wed 01-Jun-05 at 07:13AM in Stocks
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