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December 21, 2005
CSCO Lags, Hasbro Not So Happy and A Return to Growth
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Lack of follow through is the name of the game for some stocks. Cisco (CSCO) filled the November gap with a nice surge at the end of November. However, the stock failed to break resistance at 18. Instead, the stock broke support at 17.35 and remains flat at best. For the Nasdaq to get some traction, I would like to see Cisco take out 18 with good volume.
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Tis the season for toys and Hasbro, but the price chart looks rather ominous. The stock formed a rising wedge that returned to broken support at 20. Like the rest of the market, HAS consolidated the last four weeks and support at 20 holds the key. A break would be bearish. Should the stock hold support, look for a move above 21 to ignite the bulls.
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The Wall Street Journal reports: After years of strong performance by value stocks, those that are considered undervalued based on their earnings or assets, managers have become increasingly bullish on growth-oriented sectors such as health care and technology, according to the quarterly Investment Manager Outlook survey by Russell Investment Group. Managers also believe that the Federal Reserve will soon stop raising interest rates, and they are expressing more confidence in the U.S. consumer.
Judging from the chart above, it would appear that growth stocks have done pretty well the last few years. However, the pattern looks like a massive rising wedge. The bulls have nothing to fear as long as it rises. A move below the lower trendline and October low would break this rise and usher in a major trend reversal.
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Posted by Arthur B. Hill at December 21, 2005 05:42 AM