Posted by barkand on April 28, 2011 under Price trends, Support / Resistance | 
KLA-Tencor hit a high of over $51 in early March. Since then, it has been in a clear downtrend, spending most of its time below the 20-day moving average. Notice also the weak volume during the attempted rally later in the month. The bulls were not enthusiastic about accumulating more shares. There was also the poor performance of the Relative Strengh Index at that time, maxing out at 55. Some would say it is a sign of a bear market when RSI can not climb above 60 during an uptrend.
So, is there any hope for KLAC?
Surprisingly, we think there could be. But not yet. You can also see on the chart that KLAC met with some resistance at $40 in early December. Of course, by now that resistance point has turned into support. And later there was a gap from $40 to $41, which should also provide some support. And finally, there is the “round number” effect which could provide still more support at $40.
We do expect KLAC to continue its current downtrend – it is currently bumping its head on both the trend line and 20-day moving average. But we can also see the possibility of money coming in to this one in the $40-$41 range.
Posted by barkand on April 19, 2011 under Bollinger bands |
The chart above is a 5-minute chart of yesterday’s (April 18, 2011) action on the NASDAQ. The market took a punch in the face at the open. But, for me, the more interesting thing happened later in the day. By 1PM New York time, volatility had disappeared and the Bollinger band width had become very narrow. At this point, the market dipped down to the lower band and – as is often the case – turned around. It rallied the rest of the afternoon and finished 20 points higher from where the “squeeze” began.
Posted by barkand on April 13, 2011 under Bollinger bands |
After a breakout from around $23 last December, Cheasapeake Energy has been in a holding pattern at $34 for the last six weeks. Because of the lack of movement, the Bollinger bands had contracted to their narrowest width in more than six months. You can see the band width plotted below the main chart. It is even more striking when you consider that stockcharts.com calculates band width in points and not percentages. A width of $2 when the price in is $34 should be considered more narrow than when the price was lower.
And this Bollinger band squeeze often portends a sharp move – either up or down. But which way? The market doesn’t like to reveal its secrets. In these situations, the market often goes the “wrong” way first before reversing. Yesterday, CHK fell below its recent trading range and below the lower Bollinger band.
So, for now, we do nothing. But we will be watching for signs that it wants to turn around a go higher.
Posted by barkand on April 1, 2011 under Classic chart patterns |
With the start of baseball season in the US, we decided to evaluate the chart for Coach(COH). Now, Coach actually has no connection to baseball whatsoever aside from the fact that they sell leather goods and baseball players use leather gloves. However, like some baseball teams, we feel that Coach is facing a long and painful summer.
It seems to us that Coach has alot of things working against it:
- Having reached its present price of $52 from below, COH has reached a point that has been both support and resistance in the recent past.
- The 20-day moving average is just overhead and falling fast. This will provide still more resistance.
- The recent rebound from $50 to $52 was on low volume. The bullish troops are not enthusiastic about returning to battle after the hasty retreat from $55.
We forsee COH eventually settling in to the area from $45-47, or lower by 10% or more from here. This is the gap from last autumn. When (or “if”) it reaches that point we would re-evaluate the situation and see if there is any reason to be a buyer.
