Real Money Charts: GLD, FSLR, CPHD, EQIX, ENER, and A (March 10, 2008)
Charts for Monday’s Real Money article are: GLD, FSLR, CPHD, EQIX, ENER, and A
This daily chart of GLD shows a couple of successful bullish patterns. First, a “symmetrical triangle” (lower highs and higher lows) within a prevailing uptrend where the usual resolution is upward. That happened in December. Next, the “ascending triangle” in January/February — another bullish pattern if it occurs within an uptrend. OK, that’s rear view mirror stuff. Now what? Well, the tight little congestion phase over the last week is not enough data to get much of a feel for the stock. But I see two things. First, a move above $97.50 would be a bullish breakout of that tiny congestion area. But second (and more importantly), the key $100 figure looms overhead, which is the likely price at which many gold bugs will be selling. So be careful about buying now. But if GLD does move above $100, get long.
FSLR was a superstar in 2007, but the stock took a 50% haircut from the December high to the January low. Now, the bulls are climbing back into the fight, but the 50-day moving average is currently defining the trading action. Until we get a resolution of this tight range, I’d just stay away…but keep my bearish bias.
CPHD is one ugly chart, and is great evidence for the proposition that many charts are just ambiguous conglomerations of price data. But I’ll try to make some sense out of this disaster for one reader. First, the 50-day moving average is relevant. The stock tagged it in early February as well as late February. But on the second tag, the bears gapped the stock right through it and the selling pressure persists today. So, if/when the stock ultimately moves higher, look for resistance at the 50-day moving average. But that will be quite a while from now. Meanwhile, I think the next level of support is down at $20 — the November low. If you’re long this stock, try starting the analysis over again and forget about where you bought it from. Then, ask yourself whether you’d buy it now. My bet is that the answer will be “no.” You know what to do.
Last week EQIX broke below support at around $68 – $70. At this point, I’d look for some type of snapback rally to test the breakdown level. If the stock gets back to $67 or $68, I’d consider putting on a short position with a stop up at around $73 or so.
ENER is another chart that’s really a tough customer to decipher. But the one thing that stands out is the high trading volume at around $26. That creates a lot of financial commitment at that level, which should translate into buying support on any further pullback. In fact, isn’t that what we have been seeing over the past couple of weeks as the stock has bounced off $26.50 or so? But no matter which way you slice it, this stock is in sideways congestion. And a break below support puts the January low back in play.
Agilent is in a pronounced downtrend. The analysis here is pretty easy. Until the middle Bollinger Band (the 20-day moving average) stops acting as resistance on each bounce, the stock remains a great shorting instrument, or at least something that has no place in your long portfolio.
Be careful out there.