Charts of the Week, Monday January 15th, 2007
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: RSH: Previously highlighted in July, Radio Shack at that point exploded in early July on the installation of a new CEO and some hopes of a turnaround. The stock then performed fairly well for a couple months, having moved from around the 15 , area up to around 20 ,. It double-topped there in October and then came down in the fall and early winter. Last week the stock broke out again on a breakaway gap on heavy volume and trended higher, closing at the high for the week going away, nearing that 20 , October double-top resistance. Based on the pattern and technicals I believe a breakout is coming, and I'll set my initial trading target, should the 20 , area be taken out, for a move into the 23 zone. Secondary trading target is 27, and longer-term target in the 34 area. Short-term support at the breakaway gap around 18 and beneath that around 16 ,, the multiple lows occurring in the Nov-Dec period.
Analysis: ARRY: The stock had a very strong move in the Oct-Nov period taking it from just over 8 to just under 14. At the end of November the stock had been in a very bullish-looking 6-week flag type consolidation. Late Friday, on increasing volume, the stock appeared to have broken out of the flag. A push through the 13.95-14 zone will confirm that. As the stock has already reached 5-year highs, only the late 2001 high just under 16 prevented the stock from reaching all-time highs That 16 area is my initial trading target. Secondary target at 20 and longer-term target at 25. Short-term support would be at the bottom of the flag pattern, or recent lows, at 12 and beneath that the moving average at around 11.35.
Analysis: CAPA: This application software developer has seen its stock in a very steady rise for the last 12 months, breaking out of a base pattern, particularly in August, and moving steadily from the 5 area to the current area just over 8. Underlying technicals are strong and do not appear to be indicating any topping action going on, so the patterns should and could continue. Friday's closing action was at a new 6-year high, and our next target is at the 12 area, followed by an intermediate target at 16 and longer-term target in the low 20s. Short-term support is at the recent pullback lows around the 7 level. The 40-day moving average exists around 7 ,.
Analysis: XMSR: A favorite of ours back in 2003 and 2004 when the stock had a major move, XMSR went into a prolonged bear decline of its own, having reached a peak in July 2005 around 37. It eventually declined all the way down under 10 in July 2006, and then after a fall rally it retested the lows in late October. Since then the stock has moved up, consolidated for six weeks, and broke out last week on heavy volume again to new multi-month highs, breaking out of a bullish-looking base pattern. Of particular note is the impressive, strong volume on up-days, particularly the three Aug, Sept and Nov breakaway gap days that failed to follow through, but it looks like this stock has finally followed through. Short-term target around the 20 zone, intermediate target at the 25 area, and longer-term target in the 31 zone. Short-term support near the moving averages and early Jan lows around the 14 ,-3/4 zone and moving averages around the same level. The stock looks like a new intermediate trend is underway and higher prices should prevail.
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