Charts of the Week, Monday July 10th, 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: RSH: This NYSE-listed retailer had tremendous news on Friday, gapping up and soaring 3.20 on more than 19 million shares, moving up through its 21- and 40-day declining moving averages and getting a price-volume thrust that could be the beginning of an important move here. We'll anticipate that, and set trading targets at 19 1/2, 22 ,, and 26. Longer-term the stock could have a chance of getting back up into the low-to-mid 30s. Short-term price support is around the 15 area, the Friday morning opening gap, and beneath that 13
Analysis: DNDN: This low-priced biotech stock has been in a 2-year downtrend, but recently traded the highest volume of 2006 on an up-thrust, creating a higher high and higher low for the first time in more than a year. The 8-month intermediate down-leg has been broken, and the stock appears to have potentially initiated a new intermediate uptrend, but still has work to do. Important short-term resistance exists at the 5.20-.30 zone, and a thrust through that on heavy volume for me would confirm that the intermediate trend is definitely underway. Additional resistance resides at 5.85, but our short-term target would be 6 ,, the 2-year downtrend line, followed by 8 ,, the secondary intermediate target, which is the January 2005 down-gap. Beyond that longer-term target is around 11. Short-term support would be around the 21-day moving average around the 4.35-.50 zone.
Analysis: VRTX: We recently highlighted Vertex, but wanted to update it this week to show the short-term 15-minute chart, which clearly displays an extended flag pattern, and a very bullish one on low volume. Any move above 36.85 or so on increasing volume should trigger a run to our initial trading target up around the 40 area. Gap support around 34 hopefully will not be violated, but the 33-34 zone is key support, and any move below that would be a negative and cause for concern.
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