Technical Analysis of Financial Markets

Monday, December 24, 2007

Friday, December 07, 2007

Tuesday, December 04, 2007

Dow Jones 28/11/2007 to 04/12/2007: Head & Shoulders


Over the last 5 trading sessions, the Dow has seemingly charted a bearish Head & Shoulders formation. A break below the Neckline support at the 50% Fibonacci retracement level confirms the formation with a price target towards 13,000. With declining oversold stochastics signalling a bullish crossover, price action above the 200-day moving average may invalidate the formation.

Tuesday, November 27, 2007

Riverbed Technology, Inc. (RVBD)


J. C. Penney Company, Inc (JCP)


After rallying over 500% since 2003 lows, retail services and departmental store J. C. Penney has declined almost 120% and is currently consolidating at the 61.8% Fibonacci retracement level. With RSI oversold and oversold stochastics signalling a seemingly bullish crossover, an entry into a long position with a stop-loss on close below $40 may serve as a low-risk trade. An 8%, or $10.3bn, increase in Thanksgiving/Black Friday sales compared with a year ago has suggested a strong start to the holiday shopping season. Analysts at Credit Suisse have upgraded JCP from an "underperform" to "neutral” rating: http://www.newratings.com/analyst_news/article_1652781.html

Sunday, September 23, 2007

Starbucks Corp. (SBUX)


Over the past 11-month period, Starbucks coffee has declined 60% in stock price. Current price action is consolidating into a seemingly bullish Ascending Triangle formation which indicates accumulation with $28 acting as resistance. As the pattern develops volume contracts; followed by an expansion in volume as breakout occurs. Volume precedes price, and so, trade in the direction of OBV breakout which represents a cumulative total of buy and sell volume. As the northern hemisphere enters the colder autumn/winter months, the consumption of hot coffees may increase; -picture the city commuters with their scarves and coffees…

Sunday, September 16, 2007

Agnico-Eagle Mines (AEM)


Driven by gold reaching a 16-month high, Canadian gold miner, Agnico-Eagle, has hit an all-time high of $50.35. For over the last 16-month period, Agnico-Eagle has been trading in an ascending range fluctuating approx $12 between highs and lows. Any profit-taking in commodities may impact Agnico-Eagle; likewise, an anticipated interest rate cut by the Fed on Tue 18th may also impact commodities. Analysts at UBS have downgraded Agnico-Eagle from a "buy" rating to "neutral", however, a target price has been raised from $50 to $53 (see http://www.newratings.com/analyst_news/article_1598814.html).

DivX, Inc. (DIVX)

DivX develops multimedia & graphics software and services designed for media applications. DivX principally offers video compression-decompression (codec) software libraries for creation and playback of video software applications. After hitting an all-time high of $31.89 about 9 months ago, stock price has more than halved in value; depreciating around 127%. Current price action has broken above $14 which has served as both support and resistance over the last 3 months; in that period, RSI remained bounded below a reading of 50. The breakout has also coincided with a break above the 50-day moving average. Entrance into a long position with a stop-loss on close below $14 may serve as low-risk trade.

Thursday, August 09, 2007

Intel Corp. (INTC)


Manufacturer of semiconductor chips, microprocessor CPUs and flash memory, Dow component Intel, has rallied 30% in a 5-month period from year-to-date lows. Price action may currently be consolidating into a speculative bearish Head & Shoulders top formation. Technically, confirmation of the pattern occurs on break of the Neckline support after formation of the right Shoulder. A price target of the pattern can be derived by calculating the distance from the Head to the Neckline and then projecting this distance downwards beneath the Neckline support. This evaluates towards the 200-day moving average; a signal for institutional traders. Stop-loss: a close above the 50% Fibonacci extension may signal a failure of the right Shoulder; and thus the complete formation. In recent news, Intel executive Robert Baker sells 560,239 shares, offloading at an average price of $24.14: http://biz.yahoo.com/ap/070808/intel_svp_insider_transaction.html

Monday, July 30, 2007

EnCana Corp. (ECA)


Operating in Canada, United States, Brazil, Greenland, France and the Middle East, Independent oil & gas explorer and producer, EnCana, seems to be consolidating into a bearish Head & Shoulders top formation after rallying 60% since year-to-date. Strengthening stochastics indicate that price action may retrace back towards the 50-day moving average beneath the underside of the broken trendline where an entry to a short position may pose minimal risk. Stop loss: close above 50-day moving average.

Wednesday, July 25, 2007

Genentech Inc. (DNA)


Biotechnology firm Genentech, uses human genetic information to engage in the discovery, research & development, manufacture and commercialisation of biotherapeutics focusing on oncology, immunology and tissue growth & repair, based in the United States. Since year-to-date, stock price has been bounded beneath the 50-day moving average and has declined 24% with RSI unable to sustain a reading above 50 in that period. However, price action may currently be forming an inverse bullish Head & Shoulders formation; seek a close above the 50-day moving average for possible trend-reversal signal. Stop-loss: close below $74.

Tuesday, July 17, 2007

Pinnacle West Capital Corp. (PNW)


Founded in 1920, Pinnacle West Capital, based in the US, operates through its subsidiaries as an electric utilities and energy services provider which also engages in real estate development and investment activities. Over the last 2-month period, the stock has sold-off 25% in value since Lehman bank cited regulatory threats within the utilities sector; see http://biz.yahoo.com/ap/070523/utilities_ahead_of_the_bell.html. However, price action has recently pieced the descending trendline and may be forming a bullish Head & Shoulders trend-reversal formation. A long position at current prices with a stop-loss on close below the 52-week low of $39.17 poses minimal risk.

Sunday, July 08, 2007

Nicor Inc. (GAS)


Nicor engages in the natural gas distribution and shipping businesses in the United States. A recent sell-off from 52-week highs saw stock price decline some 23% in a 2-month period. However, the 3-year uptrend has remained intact which is where price action is currently trading. Enter a long position exiting on break and close below the trendline support. BusinessWeek bullish article: http://www.businessweek.com/investor/content/jun2007/pi20070618_299665.htm

Monday, July 02, 2007

McDonald's Corp. (MCD)

Over the last 12 months, McDonald's has rallied 70% hitting an all-time of $52.88. In recent news, a New York citywide ban of trans fat cooking oil which in went into effect Sunday will demand to trail alternative cooking oils. Price action is currently trading sideways with declining RSI and MACD; -implying a bearish negative divergence. Price target towards uptrend support of rally. Stop-loss: close above 52-week high.

Thursday, June 28, 2007

Mattel, Inc. (MAT)


Mattel, Inc., together with its subsidiaries, engages in the design, manufacture, and marketing of a range of toy products worldwide. Its products include fashion dolls and accessories, vehicles and playsets, and games and puzzles. Product portfolio spans from Barbie, Hot Wheels to Fisher-Price. Since August 2006, stock price has remained above its 50-day moving average rallying 70%. A recent break of this moving average has seen price action find possible support at the 38.2% Fibonacci retracement of the rally, or approx $25. With a crossover of oversold stochastics and RSI gaining above 30, an entrance to a buy-position should pose minimal risk. Stop-loss (or sell-position entrance) at close below 200-day moving average for a price target towards the 61.8% Fibonacci retracement level.

Monday, June 04, 2007

Motorola, Inc. (MOT)


Since the breakdown beginning mid-October 2006, Motorola has declined over 50% with price action remaining bounded by the 50-day moving average. Recent breakout from the 50-day moving average now serving as support may signal a trend-reversal. RSI is gaining momentum with sustainable support at 50 since the breakdown occurred 8 months ago. Stop-loss close below 50-day moving average. Jefferies maintains a $19 price target; Raymond James has a strong buy recommendation: http://notablecalls.blogspot.com/2007/05/motorola-nysemot-color-on-cost-cuts.html

Saturday, May 26, 2007

Developers Diversified Realty (DDR) - Head & Shoulders


Developers Diversified Realty functions in the US as a real estate investment trust (REIT) operating as a fully integrated real estate company which acquires, develops, leases and manages shopping centres, mini-malls and lifestyle centres. Price action has recently broken Neckline support at $61 of a bearish Head & Shoulders top formation. More recently, a 12-month uptrend which saw stock price gain 50% has broken support at $60. RSI is signalling oversold conditions; therefore a rebound towards the underside of the broken trendline, and possibly, towards the Neckline support of the Head & Shoulders formation may provide a low-risk short entry point with a stop-loss close above $61.

Monday, April 30, 2007

Dow Jones


Since the sell-off on February 27th, the Dow has rallied 1,222 points in 8 weeks gaining 10% with just 7 down-days. With RSI and stochastics signalling overbought conditions and price action remaining bounded beneath the upper treadline; a pullback seems due. Short towards the uptrend support. Worth noting the seasonal investment strategy known by the saying “Sell in May and go away” is approaching, in which stocks are sold at the start of May and the proceeds held in bonds or a deposit account; stocks are bought again in the autumn, typically around the end of October.

Sunday, April 15, 2007

Spansion Inc. (SPSN)

Previously a joint venture of AMD and Fujitsu, Spansion is dedicated exclusively to designing, developing, manufacturing, marketing and selling flash-memory solutions for wireless, automotive and networking applications. Spansion also specialises in developing NOR-type flash-memory chips, which are widely used to store software programmes in mobile phones and consumer electronics applications. Having declined 60% over a 6-month period, price action now seems to be breaking out of a Double Bottom formation. Stop-loss close below $11.50. Spansion announces first quarter fiscal 2007 earnings on April 18th.

Thursday, March 29, 2007

Micron Technology, Inc (MU)


Micron engages in the manufacture and marketing of semiconductor devices worldwide. From NAND flash memory for consumer electronics, products include memory for medical devices and image/temperature sensory components for industrial, commercial and military application. Potentially bottomed out, stock price seems to be breaking out of a 7-month downtrend which saw a decline of 63%. Micron announces second quarter 2007 earnings on 4th April.

Monday, March 19, 2007

Research In Motion Ltd. (RIMM)


Wireless mobile communications solution developer and BlackBerry handset manufacturer, Research In Motion, is possibly forming a bearish Diamond top formation. Confirmation of the pattern occurs on breakout of volume. Price target towards gap support just under $100, some 35% away from current levels.

Sunday, March 18, 2007

Hewlett-Packard Co. (HPQ)


Believing its stock price remains undervalued in spite of doubling in price over the past two years, Hewlett-Packard announced on Friday it is to spend $8bn on a share buy-back programme; http://biz.yahoo.com/bizj/070316/1433624.html. Price action could be forming a very speculative bearish Head & Shoulders pattern. Confirmation of the pattern occurs on break of the $38 neckline with a price target of $34. Stop-loss close above $40.50 invalidating the formation.

ACE Ltd. (ACE)


Global property and casualty insurance and reinsurance organization, ACE, is currently retracing towards the $56 level which has served as a pivot defining bull vs. bear price action. A bearish trading strategy would entail entering a short position towards $56 as near as possible with price target of $51; stop-loss close above $56.

Bed Bath & Beyond, Inc. (BBBY)


Bed Bath & Beyond operates a national chain of home furnishing stores across the US. Price action has formed a broadening pattern consisting of a horizontal base with higher highs following an ascending trend line; such a formation usually predicts a short-term bearish reversal. A price target can be derived by computing the difference between the highest high and horizontal base and then projected downwards; i.e. $43-$38=$5; $38-$5=$33. Stop-loss close above $40.50.

Sunday, March 04, 2007

10% Correction ?

In a period of just 7 months from 18 July 2006 to 20 February 2007, the Dow staged a powerful rally achieving a gain of 20% in that period; so a correction of some sort was overdue and expected. A drop of 10% is considered a full-fledged correction, which is an interruption of a general healthy bull market trend. If a 10% correction is on the cards, then the Dow is currently half-way through. A further drop of around 600 points from current levels towards 11500 will mark a 10% correction for Dow coinciding with the 61.8% Fibonacci retracement level of the 7-month rally.

Across the Atlantic, the situation seems more threatening. A 10% correction for the FTSE 100 will take the UK’s blue-chip index of the 100 largest companies towards 5800 which would clearly break the 4-year bull market uptrend support. A broken trendline of this nature would indicate a bearish trend-reversal where the uptrend “support becomes resistance”.

Friday, February 23, 2007

Applera Corp-Applied Biosystems Group. (ABI)

Applera engages in the development of scientific & technical instruments for use by the biotechnology industry to research & develop pharmaceuticals. Having declined 21% over a 4-month period, stock price seems to have currently found support at the $32-level which served as support 6-months prior. Recent good buy-volume, and formation of a bullish-reversal Hammer candlestick, combined with oversold conditions may suggest a reversal in price action. Stop-loss close below $32.

Friday, February 09, 2007

Gold Fields Ltd. (GFI)


South African gold miner Gold Fields is currently trading at around $16 which has served as support for 14 months. Recent good buy-volume may suggest price action is beginning to reverse a 9-month downtrend which saw stock price decline some 65%. Stop-loss close below $16.

QLogic Corp. (QLGC)

Manufacturer of semiconductor & integrated circuits technology and developer of storage network components, QLogic, has declined 27% in under 3 months and has currently found support at the $18-level. Oversold conditions suggest price action may be poised for a rebound. Initial price target towards 38.2% Fibonacci extension at around $20. Stop-loss close below $18.

Tuesday, January 16, 2007

AES Corp. (AES)

Electric power generator and distributer AES has recently been sold-off declining 20% in a month. Price action is currently trading around at $20 which has served as support for 5 months. Enter long position with a stop-loss close below $20.

Monday, January 15, 2007

Oil

Unseasonally mild weather has sent oil prices plunging some 22% to a 19-month low in a period of just a month. As short sellers cover with the possibility of OPEC convening this week to discuss production cuts, the following selection of oil and oil-related services stocks may be poised for a technical recovery over the quarter:

Halliburton Co. (HAL):

Schlumberger Ltd. (SLB):

BJ Services Co. (BJS):

Chesapeake Energy Corp. (CHK):


Helix Energy Solutions Group, Inc. (HLX):

Saturday, January 13, 2007

Gateway Inc. (GTW) - Head & Shoulders Bottom


Computer manufacturer Gateway has formed a bullish Head & Shoulders bottom pattern. Current price action may find support at the $2.1 neckline. 3Q 2006 results announced Nov 2nd 2006 reported profits surpassing expectations which saw the stock price surge 8%; price action has remained in an uptrend since. 4Q 2006 results are due this season; stop-loss $1.90.

Friday, January 12, 2007

Wells Fargo & Co. (WFC)


Financial services firm Wells Fargo rallied 33% in a 14-month period. Price action is however starting to weaken and is currently testing the trendline support of the uptrend. Sell on close below the trendline for an initial price target towards $34. Stop-loss $36.

Yahoo! Inc. (YHOO) - Head & Shoulders Bottom


After declining some 93% over the past 12 months, Yahoo! has consolidated into a bullish Head & Shoulders bottom formation. A strong 3.5% breakout from the neckline has confirmed the pattern which may see a pullback towards the neckline support before price action resumes higher. Initial price target at $31. Stop-loss: close below neckline.