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.

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.

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.

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”.