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May 24, 2006
KOMG, QLGC, T and SNDK
AT&T Testing Support
AT&T continues to test support around 25. This support level stems from the 200-day SMA and the prior consolidation (gray box). In addition, the recent decline marks a 50-62% retracement of the prior advance. The bears have the upper hand as long as the falling price channel holds. Look for a move above the upper trendline and May high (26.5) to signal a breakout and turn bullish again.
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SNDK Breaks Support
Sandisk (SNDK) had been holding up a lot better than the Nasdaq over the last few weeks, but finally broke down with a support break at 60 yesterday. This move signals a continuation of the prior decline and targets further weakness below the March low. Needless to say, this bodes ill for the Semiconductors and Nasdaq.
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Komag Breakout Fails
I reported a breakout in KOMG last Friday and the stock was showing good relative strength. However, not many tech stocks can withstand a broad decline in the Nasdaq. The stock opened strong on Tuesday and closed weak to form a long black candlestick on high volume. Weakness on low volume would have been tolerable, but weakness on high volume is not and this breakout is likely to fail.
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Qlogic Forms Flat Flag
I reported relative strength in QLGC last Friday as well, but the stock failed to follow through. The pattern over the last few weeks now looks like a sharp decline and flat flag. Downside volume remains relatively tame and I will be watching recent boundaries for a signal. A break above 18.6 would be bullish and a break below 17.7 bearish.
Posted by Arthur B. Hill at May 24, 2006 07:32 AM