Monthly Archives: March 2017

Teladoc Has a Healthy Looking Chart — Prognosis is for Profits

The telehealth services sector is a new but rapidly growing industry and Teladoc ($TDOC) is a major player in the space, providing on-demand virtual health care to patients over the internet or on their mobile devices. The stock started trading at $19 in June 2015 and in in less than two months rallied as high as $35, but just as quickly that momentum reversed and one year later it had dipped under $10 a share.

The weekly chart illustrates the one-year recovery process that followed the volatile first year of trading. A series of higher lows under the 38% Fibonacci retracement level of its historic range formed a large triangle in the latter half of 2016, and then a break above pattern resistance in January of this year, was followed by consolidation and retest under the 50% retracement level. This month the stock price broke above mid-range resistance at $22.35, and if the triangle price objective — which is measured by adding the height of the pattern to the breakout level — is realized, there is considerably more upside to the move.

The January triangle breakout was followed by one month of upside and then a rapid retest of the resistance-turned-support level. At that point, the $22.35 level was being reinforced by the rising 50-day moving average and a small morningstar reversal pattern formed at their intersection, initiating the second phase of the triangle breakout rally. Daily moving average convergence/divergence is overlaid on a weekly histogram of the oscillator and is above its center line on both timeframes. The relative strength index has crossed above its 21 period average and center line, and these indications reflect positive price and trend momentum.

(This article was published on this morning.)

PVH Reports After the Close – Here is the Technical Set-Up

(This article was published on on Tuesday morning.)

PVH Corporation (PVH) markets a wide variety of its own clothing line as well as branded apparel and accessories. Its stock price rallied more than 75% in the first three quarters of 2016, but began pulling back in October that year, retracing 62% of that gain by February 2017. The accompanying Fibonacci retracement levels of the 2016 range have defined important levels of support/resistance and have defined an inverse head-and-shoulders basing formation. The 50% retracement level at $90.00 delineated the left and right shoulders, the 62% level marked the head in the $85.00 area, and the neckline at $95.95 is defined by the 38% Fibonacci retracement level. A confirmed break above neckline resistance projects a pattern price target equal to the height of the pattern in the $107.50 area, or about a 13% gain from current levels.

Daily moving convergence/divergence is overlaid on a weekly histogram of the oscillator and has crossed above its center line on both timeframes. The daily reading reflects positive short-term momentum and the weekly histogram crossover reflects intermediate-term trend. Early last year, the weekly histogram moved above its center line and it signaled the start of the rally that year, the move back below the center line in October signaled the start of the 62% retracement period, so the current bullish crossover is technically significant. Chaikin money flow has been oscillating in a narrow range around its center line, but the money flow index, a volume-weighted relative strength measure, has crossed above its 21-period average and center line. A base has been made and the technical indications support a breakout. PVH is a buy after an upper candle close that penetrates the base neckline, using a trailing percentage stop.

Warning!! Volatility Storm on the Horizon

The Volatility Index has been in hibernation for the past four months, languishing below the 13 level, as the S&P 500 index has been tracking higher and in rally mode. Conventional thinking would be that as the broader market moves higher and questions of valuations and sustainability continue to be debated, traders and institutions would be hedging positions. That does not seem to be the case as measured by the Volatility Index; there is simply very little fear evident in in the “fear” index.

The daily chart of the VIX shows it moving in a horizontal consolidation channel between resistance at the 13 level and support in the 11 area. Bollinger bandwidth and the average true range readings are low, reflecting the overall range contraction. Periods of low volatility, like this current one the Volatility Index is undergoing, are often followed by periods of high volatility, and usually the longer the consolidation period the larger the volatile resolution that follows.

In addition to the price action on the daily chart there a series of cycle highs can be seen on the weekly timeframe. The vertical cycle lines and the cycle arcs, mark a 21-week period of volatility highs, which are well correlated to the lows on the S&P 500 index. Another $VIX high and an inverse S&P 500 low is scheduled for the beginning of April. The absolute highs are preceded by preliminary periods of perturbation or increasing degrees of volatility that are not necessarily reflected in the price action of the S&P, but arrive suddenly as large pullbacks in the index. Currently, the VIX is sitting at the lower end of the consolidation channel and under normal conditions would be in position to bounce higher, but now this level in price is being reinforced by the bullish cycle in time, and the combination has the potential to power a strong and sudden move in volatility and a corresponding downdraft in the stock index.

The S&P 500 has been moving laterally this month above support at the 2360 level. Moving average convergence/divergence has made a bearish crossover and is tracking lower and Chaikin money flow is falling off on heavy overall volume. The index looks like it is preparing for a pullback. Entering a short position in the S&P 500 or going long volatility at current levels seems like a low risk/high reward trade, but the more conservative approach would be to wait for a break above the 13 level on the VIX chart or a break below 2360 on the S&P 500, as triggers. In either case, trading based on a volatility index is by its nature immoderate, so planning on taking a quick profit or loss is a smart strategy.

Volatility Index Nearing a Cycle High

The Volatility Index ($VIX) has reflected indifference rather than “fear” over the last four months, and it has remained under the 13 level since the beginning of the year.

1000149933. VIX daily

Bollinger bandwidth and average true range readings on the daily chart reflect the narrow movement on the index, and the intersecting downtrend line and the horizontal resistance line highlight a small zone of resistance.

1000149933. VIXcycle

The benign nature of this chart may change dramatically and resistance could be easily penetrated, if a pattern of cycle highs repeats. A cycle series of 21 periods is overlaid on the weekly chart and going back to 2015, peak highs in the index have followed this sequence. We are approaching another high point in early April and should begin to see some turbulence in the index soon, if cycle continues to play out.

The KO Chart Looks OK!

Shares of Coca Cola (KO) broke above a three month double bottom base resistance level in the $41.75 area early this month. They continued through the 200 day moving average, then pulled back to retest the former resistance-turned-support line, and having completed that process now look like they are beginning the first phase of an intermediate term rally.

99720435. ko

The relative strength index and moving average convergence/divergence have been tracking higher since the February low, indicative of short term positive trend and positive momentum. Chaikin money flow has been improving along with price and is well into positive territory, suggesting this rally is attracting institutional buying.
KO is a buy at its current level using a position size that accommodates an initial stop under the $41.75 level. There will be some backing-and-filling along the way but the gap below $43.75 is the pattern target price objective.

Xilinx – Measuring the Next 12% Move Higher


Xilinx (XLNX) designs and develops programmable logic devices and associated technologies, and it has been trading in a rising triangle above a rising 50-day moving average. Shares are retesting pattern resistance and a break above this level projects another in a series of measured double-digit moves higher.

99720435. XLNX

The stock price spent the first eight months of 2016 consolidating below horizontal resistance at the $48.00 level, then rallied off the July low that year, penetrated resistance and continued up to the $54.00 level. It was followed by another period of consolidation below this next level of resistance, then four months later it was penetrated and the stock moved up to the latest area of resistance at $61.00. The rally periods have been measured moves of the previous consolidation period range, and if that dynamic continues a break above current resistance could see the stock move 12% higher from its current level.
During the price pullback and consolidation this year, the relative strength index and moving average convergence/divergence were able to hold above their center lines and have now turned higher. Chaikin money flow remained in positive territory and the money flow index, a volume-weighted relative strength measure, crossed above its center line. The stable price momentum and money flow readings suggest the stock is on track for another breakout and another potential measured move rally.
Xilinx is a buy after an upper candle close above the $61.00 resistance level using a position size that accommodates an initial stop under the uptrend line drawn off the lows since October.

T-Mobile Is Head and Shoulders Above Competitors, and That’s Not Good

A head-and-shoulders top has formed on the T-Mobile US (TMUS) daily chart and a break below the neckline support level could see the stock retrace 50% of the 44% rally off its September low last year.


T-Mobile has been a clear outperformer in the telecom space over the past six months and year-to-date it has seen a 6.6% gain, while AT&T (T) and Sprint (S) have traded flat, and Verizon (VZ) is down 6.5% in the period. After crossing above its 50 day moving average in October, it began making a series of higher highs and higher lows above its rising 50-day moving average, but more recently it has been moving sideways, forming a well-defined head and shoulders pattern above a neckline at the $60.00 level.
This month it broke below the uptrend line that defined the six-month rally and is retesting the 50-day average. Daily moving average convergence/divergence is overlaid on a weekly histogram of the oscillator and has been moving in bearish divergence to the stock price on both timeframes, and the relative strength index is also tracking lower and below its center line. These readings reflect the loss of positive price momentum and a shift in short-term trend direction. Chaikin money flow, which uses a 20-day look-back period, is declining but in positive territory, while on balance volume, a simple cumulative indicator is crossing below its 50-day moving average.
If the trend continues then the stock will bounce off the 50-day moving average and make a new higher high, continuing the pattern, but if the $60.00 level is violated it would be confirmation of the head-and-shoulders top. At that point it would be a speculative short candidate, using a trailing percentage buy-to-cover stop with a target price for the trade in the $55.00 area. This pattern objective would be a 50% Fibonacci retracement of the previous rally range.

Intel – Head and Shoulders Top


Intel (INTC) shares fell more than 2% in Monday’s session, breaking below a long-term uptrend line and closing just above their 200-day moving average and the intersecting neckline of a rudimentary head and shoulders topping pattern.

99720433. INTC

If this intersection of support fails, the pattern projects a potential 9% decline in the stock price from its current level.
The right shoulder of the head and shoulders pattern began forming in December. The head, highlighted by a high wick narrow opening and closing range doji candle, followed in late January, and last month the process was completed by the construction of the right shoulder under the 50-day moving average. A neckline can be drawn two ways, but in either case it intersects with the other, and in the area of the rising 200-day average.
The stock is testing this intersection of support after breaking below the long-term uptrend line that defined the rally off the February lows. Daily moving average convergence/divergence is overlaid on a weekly histogram of the oscillator and has made a bearish crossover on both time frames, and the relative strength index is tracking lower under a declining 21-period average. These readings reflect bearish price momentum and trend direction.
On-balance volume recently moved below its 50-day moving average, and the relationship with this average has provided important buy and sell signals in the past. Chaikin money flow, using a 21-day look-back period (light green histogram), is still positive, but the same indicator using a 10-day look-back period (light green line) is crossing into negative territory.
Monday’s decline was powered by a spike in negative volume, and it suggests neckline support and the 200-day average are likely to fail. The head and shoulders pattern price projection targets a downside move to the $32 area, which was important resistance in the first half of 2016.
Intel is a speculative short candidate after a break below the pattern neckline using a disciplined trailing percentage buy-to-cover stop.

(This article was published this morning on

Five Weekly Breakout Candidates


The daily vicissitudes of price action and opinion can erode the resolve of even the most disciplined traders’ planning and lately there has been any number of differing opinions on the condition of the market. During times like this, stepping back from the noise and distraction, expanding your timeframe, taking smaller positions, and increasing stop loss levels is the best strategy. One way to do this is by focusing on the daily charts, and here are five candidates to help start the process.


VeriSign (VRSN) provides customers with name registry and internet security services. The stock is breaking above a nearly two-year downtrend line that has helped to define the large triangle pattern it has been trading in since early 2015. It finished this week by forming a white body candle that penetrated horizontal resistance at the $85.00 level and closed near the high of the week. Moving average convergence/divergence and the relative strength index have crossed above their signal averages and are tracking over their center lines. These readings reflect improving short-term trend and positive price momentum. On the money flow side, the accumulation/distribution line is back above its 21-period average and Chaikin money flow is in positive territory, signs that the stock is under accumulation. VeriSign is a buy at its current level using a position size that allows for an initial stop under the triangle downtrend line.


Polaris Industries (PII) manufactures and sells power sports vehicles and its shares have been trading in a wedge formation since the beginning of 2016. The pattern has been compressing price action but this week a large bullish candle formed above horizontal resistance at the $90.00 level, and it looks like the stock is positioned to breakout. The stochastic oscillator has been moving in the upper half of its range since the beginning of this year and the aroon indicator, which is designed to identify early shifts in trend direction, has made a bullish green-over-red crossover. Accumulation/distribution crossed over its signal line and the money flow index, a volume-weighted relative strength measure, has been tracking higher for the past four months. The stock is a long candidate after a weekly close above the wedge downtrend line using a trailing percentage stop.


Penn National Gaming (PENN) operates gaming facilities that focus on gaming terminals including slot machines. Its shares have made several large lower highs and lower lows since the middle of 2015 but are attempting to hold their most recent low and return back above horizontal resistance in the $14.75 area. This process has formed a large rounded bottom on the weekly chart, and taken the 10-week moving average back above the 40-week average. Moving average convergence/divergence made a bullish crossover at the same time as the 2016 low and is now back above its center line, and the aroon indicator made a bullish crossover this year. Chaikin money flow has been in positive territory for most of this bottoming phase. A hammer candle formed last week, and the stock is a buy on continued strength this week, using a trailing percentage stop.


The $42.00 level on the Coca-Cola (KO) weekly chart has been both resistance and support over time, and is currently being reinforced by the 40-week moving average and the upper Bollinger band. Price stalled at this level last week after three straight strong candles that took the stock from support in the $39.50 to $40.00 area, through the 10-week middle Bollinger band and back to resistance. Moving average convergence/divergence and the vortex indicator, another trend indicator like aroon, suggest a breakout is imminent and the money flow readings support the premise. Coke is a buy after a break above resistance using a trailing percentage stop.


CyprusOne (CONE) is a real estate investment trust that develops and operates multi-tenant data center properties. Its stock price has been trading in a large cup and handle formation for the past seven months, with rim line resistance in the $50.00 area. Last week’s hammer candle formed just below resistance but finished in its lower candle range. The price momentum and trend indications, as well as the money flow readings are positive, and the cup and handle price projection targets a considerably higher objective. That said, the rim line must first be broken and hold on a weekly closing basis before entering on the long side. The risk/reward ratio is overwhelmingly to the reward side, so waiting for a confirmed break after a questionable candle is the prudent strategy.

(This article was published today on