Charts of the Week, Monday January 22nd, 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: SHOO: (SHORT): It's been a while since we highlighted stocks on the short side, and particularly with the market in a vulnerable and precarious position here we lay out some ideas to be watched for any rebound (and thus a more attractive shorting entry point) should the market rally early this week. The first one is Steven Madden. This textile, apparel footwear and accessories maker was in a strong 18-month uptrend, which saw it run from 10 to 45 during that period of time, peaking out in October. The stock started coming down, and is currently in a distinct down-channel, but recently has broken a topping pattern. With a moving averages rollover and with the technicals thrusting downward, the 18-month trend appears to be over and a new downtrend in progress. Ideally we would like to wait for this to rally back into that 33-34 zone, maybe even as high as 35, before getting too aggressive on the short side, because that area, particularly the 34-34 , area, seems to be strong price resistance, with moving average resistance just above that as well as declining tops resistance. Downside targets would be 25 1/2-26 initially, secondary target at 22 and longer-term target at the 18-19 zone. Upside resistance and potential stop point would be at the declining tops line and 40-day moving average around 36.
Analysis: CSH: (SHORT): This NYSE-listed financial services company, owner of pawn shops and payday loans, appeared last week to have broken down dramatically from a year and a half-long uptrend on heavy volume, with a thrust lower in technicals, which appears to have turned the trend from bullish to bearish. Although the stock has gone down from 47 to nearly 40 just in the last week or so, keep a close eye on this one for bearish rallies back and bear-flag type formations that could lead to further price deterioration. Resistance is at around 43 ,-44. Current trading targets would be at 38, 33 and longer-term 28 ,.
Analysis: AZZ: (SHORT): This industrial electrical equipment manufacturer, listed on the NYSE, was in a shallow rising channel from 2003 to 2006, but accelerated that with a key breakout on heavy volume in June of last year. The June-December move took it from the low 20s to the mid-50s, before reversing sharply this Friday on a downgap on big volume. That has broken the rising moving averages and the trend channel, and should lead to lower prices. Any move towards the 47-48 zone would be difficult to get through, and particularly if on low volume would be cause for potential short entries. Targets at 39, 35 and 30, with a stop above the 48-49 zone where resistance lies. Any breakout above that would be cause for concern.
Analysis: GROW: (SHORT): This is a stock we liked very much during the bull run, which appears to have reversed dramatically on heavy volume. The move which took it from about 2 in mid-2004 to the low 70s at the end of last month was dramatically reversed on heavy volume in early January. That was followed by a distinct bear-flag formation on low volume, and then a secondary break plunged it below its moving averages and the neckline of a topping-type pattern. It appears that further downside progress is likely. However, due to the sharp down-move late last week, the stock could rally back and retest resistance, which currently is around 52. But something in the 50-52 range is a distinct possibility on a snapback and potentially an area to short, with targets at 42, 35 and the 38 range, as potential short-, intermediate- and long-term targets. A move above 59-60 would be cause for concern.
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