Charts of the Week, Monday June 5th, 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: ZVXI: This week we highlight two longs and two shorts, as we're seeing distinctive patterns at both ends of the spectrum. We will not add any of these to our Charts of the Week Model Portfolio at Monday's open, but rather monitor these as well as market direction on Monday.
The first is ZVXI, a stock we put on our stocks to watch last week, which broke on a thrust in volume on Friday out of a three-week wedge pattern, and is just short of its all-time high set earlier in the month around 16 1/2. I feel a surge through that is probable, and if that occurs the stock could explode, reaching our short-term trading target in the 19 1/2-20 range short-term. Intermediate target is 25, and longer-term target in the 30-35 zone or better. Short-term support remains at the reaction lows around 12, with the 40-day moving average around 12 3/4 being initial support.
Analysis: FTEK: This is a stock we've been following and highlighting since it traded in the high single digits back in Jan. A breakout in Feb triggered a strong run which saw the stock nearly double. But over the last couple months the stock has been backing and filling and consolidating, and until last Friday had been consolidating on lower volume underneath the 21 and 40 day moving averages. But those averages were broken on Friday with a thrust in volume, the heaviest upside volume in two weeks, and it appears a new trend may be initiated. A follow-though, of course, is needed, but I believe the stock will make an attempt at retesting its all-time high set in early May at around 18.80. We'll call 18 1/2-3/4 our initial target. Intermediate target is 22-23, and longer-term target 28-30. Short-term support is around the 15 zone and then beneath that the May pullback lows around 13 3/4.
Analysis: ATI: (SHORT). On the short side, we're first highlighting ATI, which had seen a tremendous 3 1/2-year run from the low single digits to as high as 88 just this last month in May. A downside thrust on heavy volume occurred, sending the stock reeling from 88 down to under 59 before a consolidation set in -- what looks like a bear-flag consolidation beneath its 21 and 40-day moving averages. Those averages are currently crossing over around the 69-70 area, which would be a legitimate resistance zone and may be used as a tight stop on anything above 70. The downside projection, however, would be a retest of the lows around the 58-59 zone, our initial trading target. Secondary target is at 50-51, and a longer-term target potentially down in the low-to-mid 40s, with a short-term stop, as mentioned, above the 70-71 area.
Analysis: RAIL: (SHORT). Our last highlighted stock is RAIL, which in just a year has run from the highs teens to the high 70s. A sharp decline ensued in May, which tested key multi-month support at around the 61-61 1/2 area. The stock did bounce, failed at 40-day moving average resistance, and then rolled over and took out key support with a downside thrust in volume last Thursday and Friday. I'd like to see this one rally back to retest the resistance area around 61-62 for an ideal shorting zone, perhaps even as low as 59, but since this stock has already dropped from 77 down to 55 just in the last three weeks, we'd prefer to see that occur before we initiate short positions. But the top has been broken and the long-term pattern as well. Short-term trading targets are 49-50, 42 and then the 35 area.
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