Monthly Archives: January 2015

America Movil (AMX) has broken out of a cup and handle bottom and above a four month downtrend line and its 50 day moving average. Current price is a good risk/reward long entry point.

Alibaba Group Holding (BABA) has pulled back about 20% from its November intraday high to today’s low. The decline had seen temporary support at the 38% and 50% Fibonacci retracement levels of its historic range but they failed, and today the stock price penetrated the 62% level. BABA is entering a support vacuum.

The support line of the two year channel on the S&P 500 weekly chart is being tested. It has been penetrated only once, during the September/ October decline last year.

A large bullish engulfing candle formed on the Deere (DE) chart today, encompassing the overall ranges of the previous five trading days. The stock price has found support at the 50% retracement level of the October low and the December high, and met resistance at the 200 day moving average. Chaikin Money Flow is turning positive and it looks like the stock is forming a channel base.

The Market Vectors Semiconductor (SMH) fund has been trading in a horizontal channel for the last two months. Channel support in the $52.00 area, is defined by the September high and the December and January lows, while resistance near $56.00, is marked by the twin December highs. Today’s open tested channel support, at which point, the fund price saw a significant bounce. If it is able hold its upper candle range, it would be a positive sign for the broader market.

Yesterday, I noted the potential head and shoulders pattern on the DOW chart, and suggested a neckline break was needed to confirm the formation. That resistance is currently in the 17350 area.

There is a potential cup and handle breakout taking place today on the daily Verizon Communications (VZ) chart. The move is meeting resistance near the converging 50 and 200 day moving averages in the $48.00 area, but maintaining the rim line and eventually advancing above the averages, could see the stock price continue on to the pattern target which projects to the $50.00 level.

As if the Apple (AAPL) chart didn’t look weak enough coming off its November high and making lower highs and lower lows, an eveningstar pattern has formed on the daily chart. This three-day bearish reversal formation consists of a large white candle, followed by a narrow opening and closing range candle, and completed by a large dark candle. It represents a transition from bullishness to bearishness, and is a reversal pattern seen at tops. In this case, it is more of a continuation confirmation coming at a retest of the 50 day moving average, with the downtrend line drawn off the December highs and the pattern top defining resistance going forward.

It looked like another typical V-shaped reversal on the charts of the major indices last week, but today they’re seeing some follow-through selling from Friday’s session. The daily chart of the DJIA shows the movement over the last three trading days forming what could become the right shoulder of a head and shoulders top, with the neckline formed by the uptrend line drawn off the October, December and January lows. It is early in the progression of the pattern and it still requires a neckline break for confirmation, but the bearish divergence in Moving Average Convergence Divergence and Chaikin Money Flow crossing into negative territory are not encouraging signs.

In today’s session Twitter (TWTR) broke out of the channel it has been trading in since the beginning of December, and took out the 50 day moving average. The RSI crossed above its centerline and Chaikin Money Flow, a volume-weighted measure of relative strength is nearing its centerline. The close was strong, near the session highs, and formed a solid hammer candle.
At the same time, Yelp (YELP) broke out of a channel bottoming pattern of its own, and took out its 50 day moving average. The technical indications are equally as positive and today’s move came on strong volume.