Real Money Charts: AAPL, COGT, BAC, MHS, JAKK, and GFA (March 6, 2008)
Here are the charts on Thursday’s Real Money article: AAPL, BAC, COGT, MHS, JAKK and GFA.
In January, Apple fell off the tree. Over the past few weeks, the stock seems to have finally hit the ground as it churns between $120 and $130. But in light of such an obvious support line, I’d suggest protecting your long position with a tight stop just below $120. That’s where the battle will be waged.
COGT has been in a downtrend for quite a while. Last week’s surprise rally above the 50-day moving average failed miserably over the next few days. Now the stock is once again testing $9 as support. For the bears, the third time could be the charm. If they can push the stock below $9, I’d be a seller.
Notice how the 50-day moving average became relevant back in October when BAC broke below that key moving average. In December, the 50-day moving average capped the rally. Finally, during February the bulls continually bought the stock when it pulled back to the 50-day moving average. So what now? That key support level has been busted on increasing volume. The path of least resistance is down and if you’re short, consider covering around $34 or so. And if you’re long…why?
There is a lot of pain in this chart of MHS. The stock took a 20% haircut in just 2 weeks, falling from $52 down to $42. But yesterday’s reversal could be the first step in a recovery. But before you get all hopped up to buy this thing, consider this: For every seller there has been a buyer. So there are a lot of folks who own this stock from higher levels. Any rally will probably entice them to sell. So if you like MHS, be patient — you’ll probably be able to buy it at these levels for quite a while. And if you’re short…well, your buddies just covered yesterday.
JAKK has rallied more than 30% off the January low on increasing volume. Over the past couple of weeks, we’ve seen some consolidation of that move…right around where prior resistance had kept the stock down during the last quarter of 2007. This type of consolidation is known as a “flag” pattern. Until the stock breaks out of the top of that flag, I’d sit tight. Oh, and if the stock breaks below the support line I’ve drawn, then get out because the move is probably over.
I’ve zoomed in on this daily chart of GFA to illustrate the past two days of trading. Notice how yesterday’s price action gapped above Tuesday’s intraday high…and then closed below Tuesday’s intraday low. This is known as a “bearish engulfing pattern” because the current price bar literally “engulfs” the prior price bar. And since volume was also quite heavy, I’d heed this signal and avoid the stock. With the last breakout down around $36, that’s where I’d expect to see some buying pressure. Until I see that level tested, I’d stay away.
Be careful out there.