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SAMPLE Weekly Report for May 23rd, 2004 Note : All patterns and analytical commentaries are published every Sunday by 9:00 PM EST
Aladdin Knowledge Systems Ltd (ALDN) NNM (Daily) This daily chart of Aladdin Knowledge Systems has been performing well since the start of 2004. As we can see by the chart below, the current price action continues to add pressure to the 50-day moving average. With the down trending resistance line firmly in place, the price action has been coiled as the consolidation gets tighter. As illustrated by the chart, the next logical area of support is near the $19-$20 range. Should this level hold, an upside breakout could logically see the $27.50 price range. The volume has been on a steady decline, so once the breakout begins. Watch closely to insure that the move is backed by strong volume.
(Charts courtesy of eSignal)
Avaya Inc (AV) NYSE (Daily) AV is another example of a well performing stock that has several key points of interest. As we can see by the chart below, the support level at $14 is clear and should be considered a logical reaction point. Slightly underneath the $14 support level, there lies some additional support points that should be noted. Should the stock fall beyond $13, it is most likely that the 200 day moving average will have been broken and any sell offs could continue to add downward pressure. If the stock is able to compose a breakout to the upside, there are two significant events that should occur. The first is a strong close above the 50 day moving average. The second is a strong close above the down trending resistance line that has been illustrated. If these two events occur, the upside potential is significant. There are two points where the stock is likely to waver. The first is near the $18-$18.50 level. Should the price action to continue climbing above this point, the next area of reaction will be near the $22-$22.50 price point. As with all breakouts, look for strong volume to validate the move.
(Charts courtesy of eSignal)
Brookfield Homes Corp (BHS) NYSE (Daily) Based on the history that we are seeing with BHS, there are a few conclusions that can be made with the pattern we see below. This pattern actually has two distinct components. The first is the ascending wedge pattern that is comprised of both an up trending resistance line and an up trending support line. Within this pattern there is also an up trending channel that should be noted. Based on these patterns, BHS is very closely nearing the critical point where a turnaround or a strong breakout is possible. Should the upside breakout be strong enough to clear the $28-$28.50, the pattern has a good chance of further upside potential. Should the $28-$28.50 prove to be more powerful than the price action, then the first logical bounce point is that of $26.75. The next below that is somewhat convoluted as there isn’t much in the way of support levels to carry the price action. The next truly obvious support level is noted at $22.
(Charts courtesy of eSignal)
Digene Corp (DIGE) NNM (Daily) DIGE is an unusual pattern as there several areas where some short term congestion could damper the upcoming volatility. As we can see by the chart below, the resistance point near $40 is overshadowed by some previous support near $41. If the price action is able to move past $41 strongly, then a further move to $45 is possible. As the price action is currently moving well in relation to the 50 and 200 day moving averages, any downside consolidation has several areas of support. The aforementioned 50 and 200 day moving averages will act as trailing support and should show the first indications of any impending weakness. Should these indicators fail, look to the $33 level as a logical bounce point.
(Charts courtesy of eSignal)
EMS Technologies Inc (ELMG) NNM (Daily) The consolidation that we see from the fallout in mid-March has been setting up in a very structured way. As we can see, there has been some fairly intense consolidation with very low volume. As the pattern develops further, we can expect the volume to take an upturn. As the base of the pattern is approximately five points wide, we should expect a similar gain should the pattern break to the upside. Keep a close eye on the $24.50 level as we expect there to be some difficulty within this area.
(Charts courtesy of eSignal)
Edge Petroleum Corp (EPEX) NNM (Daily) This is an interesting pattern that we came across this week. The violent reaction to the upside in late April followed by the strong reversal was a good sign that the current trend may be ending. As the price action is very close to the 50 day moving average, we should be especially wary of current developments. Should the price action break below the 50 day moving average, there could be significant falling to the $11.50 level. As the 200 day moving average is still a ways away, we should be cautious and be prepared for whipsaws that could affect the price action. If the price action is able to surpass the $15 level on strong volume, there is a good chance that this stock could continue a further run to the $20 level.
(Charts courtesy of eSignal)
Escalon Medical Corp (ESMC) NSC (Daily) The typical head and shoulders formation is usually viewed as a bearish pattern. As we can see by the chart below, the price action has come to rest on the neckline of the head and shoulders formation. Should the neckline support fail, there could be some good support near the $13.25 level. Be prepared for any retests of the neckline that could rally the stock in the short term. As with all patterns, be sure to consult other time frames to help gauge any possible entries into this stock. Also be prepared for stronger volume if the pattern fails and the stock heads lower.
(Charts courtesy of eSignal)
F5 Networks Inc (FFIV) NNM (Daily) As we can see by the chart below, the price action has been resting on the 200 day moving average for a few days now. This typically is a sign that impending weakness is on the horizon. Also keep in mind that these types of patterns are bearish and typically break to the flat side of the triangle. As the pattern is sitting on such a critical level, it would be wise to wait for a clear direction before entering into any potential positions on this stock. While the overall pattern has continued to hold its structure, it would be wise to wait for the pattern to break out before counting on any momentum plays. Also look for strong volume once the move is determined. Also keep in mind that the 50 day moving average is inside the pattern and could give us a good indication of direction should the price action attempt to test it. Also keep watch of the external support line near the $22 level as the price action is sure to react to it.
(Charts courtesy of eSignal)
Gardner Denver, Inc (GDI) NYSE (Daily) As the price action continues its move towards the 50 day moving average, we are watching this one closely. GDI is subject to quite a bit of “noise” which can lead to a false sense of security when entering into any potential positions. It would be wise to wait for some strong volume indications as this stock can move significantly on low volume only to change direction on a dime. If GDI can in fact muscle a strong technical breakout, then we can reasonably say that reaching the $29 level is quite possible. Also be sure to take note that there are several points of resistance from the peaks and valleys that helped construct the pattern that we see today.
(Charts courtesy of eSignal)
Integrated Silicon Solution Inc (ISSI) NNM (Daily) This stock has been range-bound for some time now. As we can see by the chart below, the price action has been oscillating between the $13 (support) and the $19 (resistance) levels since approximately October of 2003. This behavior has been quite profitable to those who have recognized its behavior. As the price action continues to digest the impressive gains made in 2003, we can see that there are some underlying support and resistance levels that may come into play. Should the price action penetrate the $13 level, there is some additional support near $12.25. Also take note that the price action is near a very critical level at the 200 day moving average. Should the price action move upward from here, we can estimate that the support levels are still strong and holding the price action well. We can also note that should the price action behave in a bullish way, it is not impossible to see $22.50 levels in the upcoming months.
(Charts courtesy of eSignal)
Synaptics Inc (SYNA) NNM (Daily) Based on the strong uptrend that makes up the lower support line of the triangle we see in the chart below, we can make a few inferences about the current behavior of SYNA. There are two key levels that must be surpassed for continued strength. The first of these two levels is the upper resistance line of the triangle. This will serve as a reaction point when the stock breaks out of the current pattern. Shortly after that, the price action will most likely react to the price action near the resistance level near $18. If SYNA is able to close strongly above that level, with substantially increased volume, we increase the likelihood of the stock reaching the $20 level.
(Charts courtesy of eSignal)
Trident Microsystems Inc (TRID) NNM (Daily) The potential levels of TRID are somewhat wide and unbiased at this point in the game. As we can see by the chart below, the price action is near two key indicators. The 50 and 200 day moving averages are now serving as resistance points to upward price movement. The fact that the price action is again attempting to rally against these two indicators all the while moving against the down trending resistance line is an indicator that potential price movement is possible at least for the short term. It would be wise to confer with shorter time frame charts to help time any significant movements in the days to come.
(Charts courtesy of eSignal)
Have a profitable week! EducatedTrading.com
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