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June 01, 2006
CHKP, UIS and MER
I am starting to see signs of buying pressure in CheckPoint Software (CHKP). The stock fell apart in late March and early April, but managed to firm in mid April and May. A double bottom formed over the last two months and the advances in April-May show above average volume (gray boxes). In addition, notice that On Balance Volume formed a higher low and positive divergence over the last two months. CHKP consolidated over the last four days and I am looking for a continuation of last week’s surge to break 20 and turn bullish.
Unisys (UIS) is finding a mind of its own with a gap and three day surge above resistance at 6.5. Yesterday’s breakout occurred on above average volume.
As brutal as the current decline in Merrill Lynch (MER) looks, it is no worse than that seen in March-April 2005. In fact, I see at least two similarities. Both peaks formed with rising consolidations and both declines found support near prior consolidations (blue circles). It took MER over a month to find its footing and start moving higher in April 2005. I would expect at least the same now. After the decline from the low 80s to the upper 70s, it will take a few weeks for the stock to establish its footing (base) and the best we can expect is flat trading the next few weeks.
Posted by Arthur B. Hill at June 1, 2006 07:34 AM