Dow Jones, 9-month RSI

The “Credit-Crunch” sell-off saw the Dow decline over 20% from all-time-highs within a 4-month period; technically, trading in recession territory. Since then, price action has rapidly climbed 1000 points from the lows in just 6 trading days closing near the 12,500 mark (Dead cat bounce?: http://en.wikipedia.org/wiki/Dead_cat_bounce). 12,500 has previously served as both support and resistance and may define the bull vs bear case on the Dow; i.e. enter long above 12,500 otherwise remain short. As price action hit successive records between May 2007 and October 2007, RSI diverged and remains in a declining bias signalling a bearish long-term undertone. A possible favourable 50bps rate cut by the Fed on 30th January 2008 may set the scene for a rally on Wall Street; however, upside may be limited towards the underside of the declining RSI trendline.

Fibonacci Retracements & Fans

Both the Dow and FTSE are at present discovering support at the 38.2% Fibonacci retracement levels projected from the commencement of the 5-year bull-market.

Wall Street RSI

Since the beginning of the the 2003 bull market, each time RSI(14) traded at approximately 38 during a weekly timeframe, a buy signal was generated on Wall Street. However, the previous two buy signals occured at approximately a reading of 42 which is where price action is currrenly trading.

China Mobile Ltd. (CHL) - Symmetrical Triangle

Brazil iShares (EWZ) - Diamond Top ?

Gold Fields Ltd. (GFI)

Honeywell International Inc. (HON) - Double-Top ?

Dow Jones 06/12/2007

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.

FTSE 100 Fibonacci Retracements: 03/10/2005 to 18/06/2007

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

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…

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.

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

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.

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.

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.

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