Charts of the Week, Monday September 25th, 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: BITS: This week we highlight three longs and three shorts. The first three are on the long side.
After reaching its bear-market in 2004 just above 1, BITS embarked on a strong nearly 2-year uptrend, which was set off by a strong explosive move in November of 2004. After pulling back and basing, the stock then broke out again in February 2006, and extended the gains to a 6-year high near 9.80 at the end of April. That was followed by an intermediate pullback, losing half its value, bringing it back down to long-term support around the 4 area, which held. The breakaway gap and explosive price-volume surge in early August set off the recent uptrend. From the end of August to mid-September the stock was consolidating in a bullish flag pattern. Last Thursday and Friday the stock broke out on heavy volume, and extended its gains, and is now nearing a test of its six-year high set last April. A move across that would get it to our initial trading target at the high around 9.80. Intermediate target is around 13, and longer-term target around 16-17 zone. Short-term support is at around 6
Analysis: PCCC: As can be seen from the chart the stock was in a long coiling-type base pattern for more than 5 years until a breakout occurred on heavy volume at the end of August. The stock has run hard since then, and reached as high as just over 11 on Friday before backing off, which also happens to be multi-year resistance. So this is one to watch for pullbacks and bullish consolidations, which may lead to future price progress. If that occurs, a break through the 11.10 zone resistance should lead to a trading target around 13-13 ,, followed by one in the 16 ,-17 zone and a longer-term target up around 20. Short-term support is at the recent pullback around 8.85, and beneath that at 8, which represents price and moving average support.
Analysis: MFRI: The stock was in a serious bear-market decline of its own from 1997 through 2003 and barely participated in the bull market of 1998-2000. But it did manage to bottom towards the end of 2002 at around 1.20 before embarking on a very strong 2-year run that saw it drop nearly 10-fold, peaking out at just under 12 in December 2004. An intermediate pullback brought it back down near the 5 level during 2005, with a bottom in Nov-Dec of that year. The stock then embarked on another intermediate strong move, which saw it move from that 5 level up to nearly 13, before another multiple-month consolidation/coiling-type pattern occurred. In the beginning of this month there was a high-volume breakaway, which saw the stock run from around 10 up to last week's high around 16
Analysis: RIO: (SHORT): This Brazilian steel and metals company had a long run with most of that group from the 4th quarter 2002 when the stock was trading below 4 to as high as a split-adjusted 29 in May of this year. But over the last 9 months the stock has formed a head-and-shoulders top pattern, with the neckline right near current prices around 19
Analysis: INSP: (SHORT): A previous Boxer Short, the stock has been in a real ugly bear-market decline of its own for the last 2 years now, having reached a high of just under 58 in the 4th quarter of 2004. The stock broke its major trendline in the spring of 2005, gapped down in April of that year, and then had another gap-down in July, before a long sideways consolidation ensued, failing at the declining tops line and making lower lows. Last week a big gap down on negative news on heavy volume ensued, and the stock looks lower and should decline to the bottom of its long-term channel at around 14 and possibly even as low as the 12 area, which would be my intermediate and longer-term targets. But the short-term target is around 16. Resistance is around the 23 area, and anything above that may be used as a cover. There is a big gap now starting from 18.35 up to around the 22 zone, which may be partially filled, so any move back up on low volume in a bear-flag type action could be used to initiate short positions.
Analysis: FWRD: (SHORT): The stock broke hard in July on heavy volume, with the technicals plunging at that point. Since then the stock for about the last six weeks has formed a bearish flag-type pattern on low volume with barely a budge in the technicals. This also comes at right about the major four-year trendline, so a break below this pattern, particularly below 30
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