Posted by barkand on March 7, 2013 under Candlestick charts, Support / Resistance | 
The number 7 is widely associated with good luck. It might not seem that way for Isle Of Capri (ISLE) shareholders, however. Three times in the last year, shares of ISLE have rallied to and, briefly, through $7 only to get knocked back down. Certainly, if you were a buyer at that level, you would not consider the purchase to have been fortuitous.
The first two failed rallies were characterized by long upper shadows on the weekly candlestick chart below. In this circumstance, those shadows are a symptom of a tired rally. The bulls had run out of energy, or there were many sellers eager to get a price above $7 for their shares, or both. The latest rally failed to even produce those short-lived upward spikes. The shares briefly edged above $7 and immediately turned back. It is interesting to note also that back in 2011 a bit of an air pocked developed between $7.00 and $7.75. It is not a surprise that the market would run into trouble in that region.
So far, prices have not completely collapsed, as they did after the first two pushes to $7 (though there is still plenty of time for that). And, generally, we are seeing high trading volume where we would want to see it. Maybe the third time’s a charm? If you don’t want to gamble, then wait for two consecutive weekly closes above $7 before taking a long position here.
Posted by admin on December 17, 2012 under Bollinger bands, Classic chart patterns, RSI, Support / Resistance, Volume, xattascope |
Shares of Target (TGT) recently reached 5-year highs, but in our opinion shareholders will have a long wait ahead of them before seeing any further advances. To understand why, we need to back up to the beginning of 2011. The highs seen at that time formed the left edge of a cup-and-handle pattern. The right hand side of the cup was formed in March 2012 and the “handle” took prices down to their 20-week moving average. As is often the case with this pattern, the shares went higher before topping out in August.
Of concern to us is the fact that trading volume dried up throughout 2012 even as the shares marched higher.
And now TGT has tagged the lower Bollinger band on the weekly chart for the first time since the beginning of the year. Sometimes, this event can provide support for prices. But, based on the trend of volume during the advance, we suspect the shares will “walk” along that lower band for a while.
Let’s now turn on the xattascope and see if we can find any more information on a daily chart. On this chart, we first see that the shares twice found support this autumn at $61. On Wednesday of last week, TGT closed decisively below that level and now sits at $60.50.
As on the weekly chart, prices are scraping along the lower Bollinger band. We would note also the information provided by the 2-period RSI. Traders sometimes use extremely low values of this indicator to find opportunities for a snap-back rally. In the case of Target, each of the last three rebounds was weaker than the one before it. That is a trend which cannot go on forever but we are not eager to anticipate a stronger rally.
There is a bit of an air pocket between here and the $57-58 range. Our best guess is that the shares continue lower into that range before any tradable rally presents itself.
Posted by barkand on October 22, 2012 under Point and figure charts, Support / Resistance |
Priceline (PCLN) made a double-top high back in the spring. But has given back $200 per share, or more than a quarter of its value, since then. Many chart watchers have noted that PCLN is quickly approaching an important area of support in the $550-560 range. This range thwarted any and all advances during 2011. Once prices broke above this range, it then functioned as support earlier this summer. Many are expecting a bounce here, but we are not among them.
Sure, the $550-560 area could provide some temporary help to the bulls. However, when looking at a chart such as this one it is not sufficient to merely locate these support points. The bigger question is whether or not the support will hold.
We see that everybody who bought their shares in the last 8 months is now underwater. Many shares are in the hands of mutual funds, which have a deadline at the end of this month for recognizing capital losses. Surely, some funds will choose to dump shares and account for the capital loss. Probably that process has already started. It is hard to imagine enough buyers coming in to the market to hold prices up.
Our analysis of a point-and-figure chart of PCLN suggests a downside target of $510 based on the price movements in the last congestion area. There is also some pychological support nearby at $500. We might be interested in the shares in the $500-510 range, but we are not willing to speculate that the $550-560 support area will provide a sustainable bounce.
Posted by barkand on September 28, 2012 under Relative strength, Support / Resistance, Volume |
Shares of PNC Financial Services, the mid-sized bank and asset management firm, are up 50% from the lows reached just over a year ago. We will give you a moment to peruse the chart and then we will give you four reasons why we are technically bearish on PNC.
1) The shares failed earlier this month to overcome resistance at around $67. This was the third time the bulls retreated after reaching these heights.
2) For whatever reason, bullish phases in PNC tend to commence on a 10-month cycle. We are still a good 5 months or so away from the start of the next one.
3) This summer’s rally up to long-term resistance was achieved with low volume. It seems that even the bulls did not really believe they could break through $67.
4) Comparing the relative strength of PNC to BKX, an index of banking shares, shows that PNC has actually been underperforming its peers since this spring.
Long-term, it is very possible that PNC will make a run to new highs. But first the bulls need to regroup and perhaps they will try again in early 2013. Until then, we expect shares of PNC to be “dead money”. Use your cash for other opportunities.
Posted by barkand on August 14, 2012 under Bollinger bands, Classic chart patterns, Support / Resistance |
Agriculture giant Monsanto might be benefitting from the harsh weather conditions in America this summer, but it does not mean you should buy the company’s shares.
Earlier this summer, MON finally broke through strong resistance at $80 and quickly advanced 10% from that resistance point. Unfortunately, each of the three pushes higher came with less intensity. The first one punctured the upper Bollinger band; the second merely tagged it; the third failed to do that much. On that third push, the shares tried on three different days to go above $89 but they retreated every time.
A fourth attempt to go to new highs probably will not succeed. A rally from here will probably bring many sellers into the market. In our opinion, a consolidation phase most likely is the next step for MON.
Posted by barkand on August 9, 2012 under Support / Resistance, xattascope |
It was a miserable year for XOMA shareholders in 2011. The share price started the year above $5 but by December it was barely above $1. Markets rarely flip immediately from bearish to bullish, and XOMA’s situation was no different. The shares thrashed around for most of the winter, oscillating above and below $1.50, before decisively starting a new uptrend in March. Since then XOMA has been living above its 20-period moving average. Although prices have stagnated this summer, we would still consider the uptrend to be intact unless or until it closes below that 20 week moving average for two weeks in a row.
Dusting off our xattascope, let’s take a closer look at what has been happening this summer. On the daily chart below, notice how prices stopped going higher at two times their 200-day moving average. This is a frequent occurrence and coincided with some natural resistance at a “round” number (yes, technical analysts sometimes consider a 4 to be round). At that point the shares began drifting lower. So far this month, XOMA shares have come dangerously close to the $3 mark, but buyers quickly come into the market and bid the prices back up. We tend to think that XOMA is merely going through a consolidation phase now and will eventually resume its uptrend.
