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November 21, 2005
Kodak, Gold, National Fuel Gas, Intervoice and American Eagle
Good day! The major stock indices may be overbought and near resistance, but there is certainly no signs of weakness. In fact, there have only been consolidation days in November.
The Dow Diamonds (DIA) has held its gains quite well and closed above its summer highs. Even though the stock is up around 5% in a few weeks, the bears do not have a leg to stand on as long as 106.5 holds. This move had power and the bulls have yet to relinquish control.
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Barron's is talking up Kodak (EK) as a turnaround play. Sorry, but I am not buying into this one. Kodak makes good cameras and I own one myself. However, this business is turning into a commodity business, if not already. There is just too much competition out there, especially for middle tier cameras. The big Asia produces are driving prices down, increases features and flooding the market. From the price chart, it is also clear that investors are NOT buying as the stock has not even formed a base yet. The S&P 500 is trading at a new high and EK is trading near a new low. Until this stock breaks the March trendline and moves above broken support at 25, I would steer clear. Falling prices are good for digital camera buyers, not stock buyers.
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Sandra Ward (Barron’s) interviews John Hathaway, a gold fund manager who is, surprise-surprise, bullish on gold. There are no arguments here. I will not go as far as the predict $1000 per ounce like Mr Hathaway, but the chart clearly points higher with 500 the minimum target and 620 the upper channel target at the end of 2006. Gold made another strong move over the last few weeks. This is especially impressive when one considers that the US Dollar Index also broke out and is moving higher. Gold is moving higher on its own and this further reinforces bullish resolve.
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NFG - National Fuel Gas surged above resistance in Aug-Sep and then corrected sharply in October. The decline returned to broken resistance and this level now offers support. After a few weeks of firmness, the stock gapped higher last week and moved up on good volume three days in a row. This solidifies support and keeps the uptrend in place.
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AEOS - American Eagle Outfitters is in a very competitive retail spot. The stock swooned in Aug-Sept and then firmed over the last two months. The pattern since mid Sep looks like a rising flag and the stock gapped lower last week. The gap is holding for the most part and further weakness below 22 opens the door to the teens - and I don't mean the teen shoppers. A move above 26 would fill the gap and be bullish.
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INTV - While the Nasdaq and S&P 500 moved to new highs last week, Intervoice moved lower and shows poor relative strength. The stock was turned back at 9.6 resistance in early November and failed to partake in the November rally. The stock opened strong on Friday, but closed weak with above average volume. Selling pressure is picking up and a move below 8.6 would be bearish. Conversely, a move above 9.6 would break resistance and be bullish.
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Posted by Arthur B. Hill at November 21, 2005 10:50 AM