Charts of the Week, Monday May 8th, 2006
Charts of the Week are stocks that appear to be attractive candidates for short- to intermediate-term (2-6 weeks) returns based on analysis of their daily or weekly chart formations and underlying technicals. Support levels may be used as possible stops.
Analysis: BIDU: After an initial, post-IPO thrust last August that saw it reach over 150, this Internet information provider went into a prolonged intermediate decline that saw it pull all the back into the mid-40s, bottoming in February. The stock based out in Feb-Mar, and since then has been in an ascending channel, and is currently testing key multi-month resistance up around the 63 1/2-64 zone. A breakout from this level should pick up volume and thrust the stock higher. My trading targets are 70, 83 and 99 over the short-, intermediate-, and long-term. Current short-term support is at the trendline and moving averages around 59 and beneath that is price support from the late April lows in the 55-56 zone. The June 65 call options (BDQFM) trading at 4.70 are a cheap way to play this stock for people who can take the risk, and we'll enter those at Monday's open.
Analysis: REDF: This is another play in the foreign Internet portals, which was a former pick of ours in the low teens. It subsequently tripled over about a 4-5 month period, and saw a high-volume spike in early February into the low 30s, which resulted in the current 3-month pullback in a very neat orderly channel. The stock spiked last Friday nearly 2 points on the heaviest volume in five weeks, and may be initiating a new trend. The stock is currently at its declining 20-day moving average and just below the 40-day moving average. It still has something to prove, but it's one to keep an eye on. Short-term support is around the 18 zone, and beneath that the 15 area. Trading targets are resistance at around the 23 area initially. Secondary target is 27, and longer-term a retest of the 33 3/4 area and perhaps into the high 30s or low 40s beyond that.
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