Charts of the Week, Monday May 29th, 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: PWEI: An old favorite of ours, the stock has been in a shallow, rising, 6-month, consolidating channel after its big run-up from last Nov-Dec, which saw it quadruple inside of 5-6 weeks. But with underlying technicals holding up as well as they have, it appears the stock may be on the verge of making another similar-type move. That would take some movement. A breakout over the 28 1/2 area would take out the 40-day moving average, which I'd want to see along with a thrust in volume. Friday's volume was the heaviest of the last three weeks or so and could be a forbearer of a pending move. Initial trading target would be 31. If the 31.95-32 zone is taken out, and new all-time highs are reached, we'd be looking for something in the high 30s and then mid-40s and beyond intermediate- and longer-term. Short-term support is at the 26 area, and beneath that a takeout of the May 15 reaction low around the 24 1/2 area.
Analysis: JOBS: We first highlighted this several weeks ago and it did well. As can be seen from this chart, the stock thrust in early April, flagged at the end of April and beginning of May, and then exploded into the highs for the last 16 months or so. Recently the stock pulled back again in an orderly lower-volume pullback, with underlying technicals holding up well. Friday the stock attempted to make a move, retesting resistance, which appears to be around 28 3/4. A takeout of that level should lead to a retest of the May highs up near 32, our initial trading target. Secondary target in the mid-30s, and longer-term target in the low-to-mid 40s. Short-term support at the recent pullback lows at about the 25 area.
Analysis: MED: This specialty retailer has had a phenomenal run since Nov when it traded under 4, reaching near its 2003 high and testing it last Friday, above the 18 area. The stock has strong momentum, and terrific underlying technicals and volume pattern, and although it's extended it can continue this run. But it should be monitored very carefully as it is vulnerable to pullbacks now that it's getting away from its 21 and 40 day moving averages. Short-term support is at the recent pullback lows around the 14 1/2-15 zone. If the 18 3/4 level is taken out, which is the 2003 high, I'd be looking for an initial trading target around the 21-22 zone, intermediate target at the 27-28 area, and longer-term target around 34-5.
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