There’s only one stock that met my breakout criteria for today, and that’s Eddie Bauer Holdings (EBHI). This is a nice rounded consolidation play that gradually broke out on higher volume on the preceding days. The continuation gap in the beginning of August lived up to its name and EBHI made a new 9-month high. The next level of resistance is at the $9.40 area back in Aug-Oct 2007. It looks like EHBI will make higher highs from this point on.
Washington Mutual (WM) hit a 17-year low! Goodness, and it looks like its going lower. Shares are down 29.7% today on 213.8 million shares, nearly 3x the average daily volume. If big house Lehman (LEH) is having major trouble finding capital, then Washington Mutual will have a field day trying to find it. It now costs $4.3 million + $500K per annum to insure $10 million in WM debt for five-years, up from $3.2 yesterday. That translates into a possible 85% chance that WM will default within five-years, according to investors. Don’t expect any type of quick bounce on WM as the selling momentum is clearly increasing from the past 2 days. Long positions should be entirely avoided, and I don’t have to remind you how quickly fear precedes panic.
Raser Technologies (RZ) dropped 13.5% today, mostly likely contributed by forced liquidation/margin calls from institutions. Management did reaffirm their outlook, but the stock has broken may support at $7. Once a break like this occurs, it is very difficult for a stock to climb back out.
Las Vegas Sands (LVS) dropped along with Wynn Resorts (WYNN) and other casinos on a report issued by the Nevada Gaming Control Board stating that casinos earned (or won) a 13% decrease in revenue vs. a year ago. The results were even worse for Strip casinos, down 14.7% to $519.2 million. Don’t people gamble more, not less, during recessionary times? LVS formed a descending triangle and broke support at $40. The next major level is at its July lows at $30.
I’m not sure what happened to Griffon (GFF) today, but traders eagerly dumped the stock (down 8.3%). After forming a breakaway gap from consolidation, GFF was unable to find support at the 50-day MA and continued downward to break the 200-day MA. I’m not sure who’s still holding, but they might want to think about it. The next area of support is at $8.50-$8.75, and it’s a strong one. Selling momentum should subside and consolidate in the $8.75-$9.50 area; otherwise, GFF has no chance.
GFI Group (GFIG), an investment broker (no surprise), dropped 24.4% today on news that the company was unable to reach a deal with Tullett Predon (TLPR: UK), a broker in London. Tullet’s stock isn’t doing too well either. They’re down about 25% from their high in February to 382.75. Although the entire space within a gap is considered support, if there’s a major violation within that empty space on huge selling volume, then that’s a clear warning sign. Today just happened to continue what wasn’t finished. Expect a bounce from the $7 level in the near-term.
Photon Dynamics (PHTN) is awaiting closing clearance from the Committee on foreign Investment. This follows the announced acquisition by Orbotech for $290 million. Today’s action seems unusual to me. The announcement wasn’t announced until after 2:30PM, but the stock broke down starting at 11:45PM. Either way, PHTN did hit a low of $10.74 but was able to sharply regain some lost ground. The gap from the Orbotech is entirely filled.
Goldman Sachs downgraded Calamos Asset Management (CLMS) to “Sell” from “Neutral” and adding the firm to Goldman’s Americas conviction sell list. Shares dropped nearly 12% and looks like it formed a breakaway gap, cutting through both the 200-day and 50-day MA’s. Expect continued downside for CLMS.
Melco (MPEL) was a stock I shorted a while ago back in June, but I never expected it to hit $5. MPEL is down 11.3% today due to a likely drop in revenue from A-Max’s VIP level (A-Max is a partner with Melco). The money that high rollers are betting dropped 18% to $33 billion in August from $40 billion in July. Analysts aren’t worried about the drop, but investors are. Who should you trust? Well, Jefferies & Co. reiterated their “Buy” rating and price target to $18 and JPMorgan reiterated their “Overweight” rating. MPEL looks like it’s going down even further.
Cavium Networks (CAVM) took a 10% hit today on something that didn’t come from any news. It appears to be the systematic sell-off continuation since 3 days ago. CAVM dropped below their Feb-March levels and have hit a brand new low since its IPO in March 2007. There are no more support levels remaining at this point.
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