Technical Analysis of Financial Markets

Saturday, September 30, 2006

Wal-Mart Stores, Inc. (WMT)

Over the last 28 months, the $50 level for Wal-Mart has served as defining resistance and support levels of bull versus bear. With current price action again hitting this $50 level as resistance and RSI and stochastics overbought, now be a good entry into a short position; -adding to the position on break and close below the uptrend. Stop loss: break and close above $50.

Thursday, September 28, 2006

Advanced Micro Devices - (AMD)

Microprocessor manufacturer AMD was downgraded today by ThinkEquity; as a consequence, price action traded lower. However, the move lower was enough to break an uptrend of a 60%-gain rally which lasted 2-months. OBV has also confirmed the breakdown. The trend-reversal may find support at Fibonacci retracement levels ~$24, ~$22.50 and $21.

Nvidia Corp. - (NVDA)

After an 80% rally in 3 months, NVDA has today broken the uptrend. Short a possible climb back towards the trendline at ~$30; “support has become resistance” trend-reversal. Sell.

Franklin Resources, Inc (BEN)

Asset management firm Franklin Templeton along with the other financials have recently hit fresh highs. A 30% rally since late July currently seems to be consolidating into a small bearish Diamond Top formation. Bullish signs: a golden cross (the shorter moving average crossing above the longer moving average) has occurred and a modest buy-volume spike. Bearish signs: RSI and stochastics seem overbought. OBV seems like it is topping; since volume precedes price, trade in direction of this indicator.

Wednesday, September 27, 2006

Humana, Inc (HUM)

Health insurance and healthcare plans provider Humana recently hit a 52-week high. In two months it has rallied some 33%. A recent steeper sub-uptrend beginning second week of Sep ended 4 trading sessions ago and price action has currently found support at the 38.2% Fibonacci retracement level of the subtrend, or ~$65.50. Stochastics still seem overbought; a possible price target of ~$61.50 on break and close below the broader uptrend at $65.

Sunday, September 10, 2006

Dow Jones - Bearish Rising Wedge

The Dow looks as though it has completed a Rising Wedge formation. This pattern is bearish and usually occurs on diminishing volume. Textbooks suggest that the pattern must have at least five touches; – that is, tests of the support and resistance trend lines should occur at least five times in total. Volume should increase as the breakdown increases in magnitude. It’s typical to see a 5% decline in price after the wedge formation. Should this hold true, a price target of 10,925 may be a possibility. Watch Fibonacci retracement levels for support.

Dow Jones - Speculative Head & Shoulders

Saturday, September 02, 2006

FedEx Corp. (FDX)

FedEx seems as if it is forming a bullish Double-Bottom pattern. The two-month downtrend which began in early July seems to have been broken; today saw a breakout which may signal a bullish trend reversal. Surpassing resistance at $105 will confirm the Double-Bottom pattern setting up a price target of $110. It may be worth noting that the 200-moving average has crossed above the 50-day moving average--known as a “Death Cross”; since long-term indicators carry more weight, this may indicate a bearish signal.

Friday, September 01, 2006

SanDisk Corp. (SNDK)

Since gapping-up over a month ago, SanDisk has rallied almost 60%. However, with overbought stochastics at their highest attempting a crossover and RSI hovering above 70 for the first time in months, overbought signals seem abound. Historically accompanying more sell volume than buy, $60 has interchanged between support and resistance and is currently serving as resistance. A short-sell at current levels near $60 may serve as a low-risk entry to a possible target towards the uptrend support at $55.50-$56. A break and close below the uptrend support may signal the end of the rally and a trend reversal. From then on, watch Fibonacci retracement levels for support.


NVIDIA has rallied some 60% in just over a month. Along the way, stochastics have been signalling overbought conditions whilst RSI remained moderate. However, during the past couple of trading sessions RSI has been hovering above 70 for the first time since the rally began signalling overbought conditions. OBV has been declining for the most part of the rally implying a negative divergence; smart money may be offloading. A failure to sustain a close above $27 to maintain the uptrend may indicate a trend reversal. Watch Fibonacci retracement levels for support beginning with $25.