Charts of the Week, Monday June 26th, 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: JBLU: This week we feature four stocks that have recently demonstrated excellent relative strength in a declining market, and are the kind of stocks that should do very well when the market finally does turn and are worth keeping an eye on, particularly on pullbacks to support.
The first one is JBLU, another strong member of the airline group, which recently has done very well. The four-month bottoming pattern occurred after the intermediate decline that saw it drop from nearly 17 to under 9, about a 50% retracement. The ensuing base pattern was broken about a week and a half ago on an increase in volume, and then the stock took out the March snapback high as well, moving across key resistance in the 12-12
Analysis: IMCO: This automotive, alternative energy-type stock has recently demonstrated strong relative strength, when it surged through its 4-year base pattern at resistance in the 9 , area. It pulled back to that area and tested it, and bounced again, currently displaying a short-term double top around 12 ,. Much stronger support exists around the 7 , area, but we're not expecting a pullback that far, although a retest of the 9 area is possible, and would be a good place to initiate positions should the stock do so on a low volume pullback with technicals holding up well. Targets would be in the 15-15 , area, intermediate target at 20, and longer-term target at 24-25, or possibly as high as the high 20s, the 2000 high. Very promising-looking technical pattern.
Analysis: MIKR: This is also demonstrating very strong relative strength in this recently declining market. MIKR came out of a more than year-long base pattern recently on very heavy volume and thrust not far from the Dec 04 high, and did so on heavy volume. Over the last three weeks, volume has been extremely strong and way above the norm. The breakout occurred in early June, the retest occurred in mid-June, and the stock has moved from around the 9 , area to 14 and change recently before backing off on Friday. But the overall pattern and technicals show extremely strong relative strength in a recently declining market, and this one should be watched for a potentially explosive move should the market reverse into a stronger up-phase. Support exists at about 11
Analysis: SIMC: As can be seen on the chart, the stock broke out on very heavy volume and has traded very heavy volume since then as well. The recent move from the March low around 3 , took it up to just under 13, a 250% move followed by a recent flagging action. Late last week the stock started moving up again, displaying excellent relative strength and strong volume with a surge in technicals. This is one to watch for potentially a big move down the road, but we would love to see this one back and fill and consolidate and perhaps pullback to retest support. Current short-term support exists at the 8 , area, and beneath that more important support at 7 ,, with current resistance just under 13. Current targets would be a move to 12 ,, 16 and 21.
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