Charts of the Week, Monday October 9th, 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: ENER: Our first stock this week is an old favorite of ours highlighted and reviewed on several occasions, but we thought it was appropriate to highlight it this weekend. Energy Conversion Devices (ENER), after moving down from the May highs in the mid-50s like many stocks did, reached the high 20s, the same level it reached a year-ago November and December, before reversing. It's been in a rising bottoms, rising tops channel over the last 60 days or so, and is now at key overhead resistance going back to the beginning of the year near the 39-39.15 zone. The prior two rallies we've had in the last month or so both came on strong volume, with the pullbacks on low volume, the characteristics being strong. A breakout above 39-39
Analysis: CMED: We believe the entire group is showing promise, and China Medical Technologies, in particular, appears to be a leader in the group. It had a big move last year, running from 15 to nearly 45, tripling in about a six-month period, but peaked out earlier in the year, and was in a six-month, very distinct downtrend. It broke out of it and then retested it, double-bottoming in September, and then moved up, breaking out of a week-and-a-half flag pattern just on Friday on a surge in volume and technicals. It is currently right at key 4-month resistance near the 24
Analysis: IIVI: II-VI Inc. is a stock we also reviewed three weeks ago. It has since then pulled back and consolidated, and its underlying technicals remain strong, as does the entire pattern. The stock acts impressive, with a strong angle of ascent. A breakout above resistance at 24, which was tested on Thursday and Friday, should lead to possibly further sharp progress. The short-term trading target is 30, intermediate target 36, and longer-term target in the 40-42 zone. Short-term support is at the mid-September pullback low around 24, and beneath that the breakout point around 22 should serve as additional support.
Analysis: FTEK: We've highlighted and reviewed Fuel Tech several times over the past year and still like it. After we initially highlighted it, the stock nearly doubled to just under 19. An intermediate pullback ensued that took it back to retest near the 10 level by the end of July, but the stock has since then re-asserted its uptrend, and as recently as Friday broke out on the heaviest volume in several months. It broke through a key five-month resistance level, which I believe should lead to a test and break of the May highs during any move to the top of the channel. My trading targets are 20, 24 and 30 and potentially even higher than that. Short-term support would be a retest of Friday's lows around the 15 , area, and beneath that the September double-bottom support zones close to 13 3/4-14. I'd like to see the stock hold 14
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