Tuesday, September 16, 2008

TODAY'S BREAKOUTS & BREAKDOWNS

EPIQ Systems (EPIQ) formed a descending triangle but broke to the upside, closing up 22% today. The next area of resistance is at $14, which it hit today, and the 200-day MA near $14.50.

Glacier Bancorp (GBCI) broke out today on no apparent news, closing up 13.8% on huge volume. Again, a descending triangle was formed that broke to the upside, cutting through the $23.50 resistance level. Both the 50-day and 200-day MA’s are turning up, a bullish sign.


Cathay Bancorp (CATY) is a chart like I like to trade. Each day is “clean”, meaning the days aren’t scattered everywhere which gives you an idea of where the stock is going. A nice clean breakout occurred after a thigh consolidation and the chart indicates that this stock will continue higher. Make note of the impending 50-day/200-day MA crossover.

Oil was down today, so obviously most of the airlines got a boost. Delta Airlines (DAL) showed the cleanest breakout of the major airlines, spike up 23.4%. DAL meets resistance at the 200-day MA so I expect a consolidation for the next several days.


If AIG fails/gets bailed out/gets stuck into conservatorship/whatever, Chubb (CB) will stand to benefit. Citigroup released a report noting that CB will be one of the few insurance companies that will profit from AIG’s troubles. Whatever the outcome, it looks like business will leave AIG anyway. CB spiked beautifully today, up 13.4%, breaking through all resistance points on this chart. This $55-$55.50 area was strong resistance in 2007 and CB tested and failed it several times. Notice the higher lows made over the course of 2 months:


Alon USA Energy (ALN) is an independent refiner based in Dallas. Typically, refiners go up when oil goes down, but not always! ALN spiked up 13.3% today on no apparent news. The high-and-tight consolidation was a big clue indicating a breakout. I don’t recommend buying now since ALN must successfully test the 200-day MA at the $15.50 level.

TCF Financial (TCB) rallied toward the end of the day along with the financials, up 12.4%. TCB is one of the best performing short-term financial stocks right now. Again, the consolidation gave way to a breakout. The next area of resistance is at $20 (March 2008 high) and $21 (February 2008 high). The uptrend remains intact and strong and be a near-term buying opportunity.

This stock went from $105 to $30, but not before hitting a low of $13 today. Unfortunately, Constellation Energy (CEG) has $150 million in a credit facility that came from Lehman (LEH). The stock was halted yesterday (I don’t know why LEH wasn’t halted if CEG was) and despite efforts to calm investors, the stock still dropped. Fear begets panic. The next support level is at 2002 levels at $20.

Reddy Ice Holdings (FRZ) got smacked today, dropping 34.8%. This company has quite a few problems and apparently one of its VP’s is accused of possibly violating antitrust laws. FRZ also suspended its dividend, giving existing shareholders not much incentive to hold. There is no support for Reddy Ice Holdings (FRZ) since its 2005 IPO.

Owens Illinois (OI) cut its 2008 free cash flow outlook to $332- $400 million down considerable from its previous estimate of $500 million. Shares dropped 17.3%. Next long-term support? Doesn’t really appear to be any except for a possible level at $20. This is a classic boom-and-bust pattern.

Synutra (SYUT) just got hit with a recall, due to a positive test of melamine in its baby formulas. Next support is at the $12 level in mid-2007. The Sanlu Group got hit before SYUT and apparently, both company’s products had melamine. Melamine is a organic base that killed 2 children in China, so obviously, it’s not supposed to be milk formulas. The next level of support is at around $12, right before the huge 1.5 year run up.


The Central European Distribution Corp. (CEDC) probably dropped 13.6% due to the fact that Russia’s stock market fell 17%, and trading was halted. CEDC will not survive if Russia’s market remains in panic mode. Expect this one to continue to decline much further. This type of measured move breakdown is one of my favorite types of charts to short. Note the various flags and pennants that formed prior to each breakdown. I missed this one, but I’m sure there will be another opportunity.

Dell (DELL) gapped down three times, also known as a Sanku (three window pattern) in Japanese candlestick terminology. Usually, the third gap indicates that a reversal may form soon, but I don’t know…DELL’s next major support is at around $16 back in 2001.

Another boom-and-bust stock is Trident Microsystems (TRID). Take a look at a 5-6 year chart. This reminds me of the NASDAQ in 2002, and if the pattern suggests what I think it does, then TRID will be dead money for a very long time.

2 comments:

djplastik said...

What do you think of TRV? Good buy on a pullback?

John C. Lee said...

Good buy on a pullback. The 200-day MA is your major/main support.