Real Money Charts (April 30, 2008)
Here are the Real Money charts for Wednesday: SOHU, BIDU, DBA, USO, and SFLY.
SOHU has been a rocket ship after blasting away from a base at $50. With the stock up almost 50% over the past few weeks, isn’t it about time for a rest? No way I’d buy SOHU now — let’s face it, if you aren’t long, then you’ve missed the move. Get over it and move on. I’d wait for a deeper pullback to at least the high $50’s before buying. That’s the first level at which we could expect some buying interest.
BIDU is in a steep ascending channel, hardly pulling back at all. Rather, just enduring a few days of sideways consolidation before blasting off again. I’d use the 10-day moving average as my reference point for placing a stop loss. Wondering where the 10-day moving average is? It’s right under the rising support line.
The DBA is an ETF based on various futures contracts of commodities like wheat, sugar, soybean and corn. I’ve drawn the current support line that is so close to being broken. You’ll notice how the 50-day moving average has morphed from supporting any pullbacks to now capping the rise of any rallies. That’s a textbook bearish reversal. I’d watch $36. If DBA closes below that level, the next 10% decline is likely to occur in a hurry.
USO has been in an uptrend since breaking above prior resistance at around $78. After forming a brief channel between $78 and $88, this oil ETF is on the move again. But the USO is showing some weakness now and I’d expect it to fall back to the breakout level and test prior resistance as current support. I’d wait for that move and be a buyer near support.
SFLY had been in a tight volatility squeeze from early February until just recently. After a brief fake out to the downside, SFLY is now breaking out to the upside. But volume is not confirming this move. After 4 consecutive days of advances, volume is back below average. As such, this move is suspect and I’d stay away from this one until volume starts confirming the advanceor until it falls back to a better entry point nearer the 50-day moving average.
Be careful out there.