Stock Technical Analysis: Wk of 7/20/09

Quite a turn of event.  Even though NASDAQ broke through the support level slightly and appeared to have formed a double top bearish pattern last week, QQQQ quickly turned its direction this week.  It was definitely a reverse free fall, and I’m betting many bears got caught in it without a chance to react fast enough.  I’m certainly glad I didn’t get caught in this one.  At this point, I’m hesitant to get in the market either way.  I am going to watch the market’s next move and re-assess.  In midst of the earnings season, it’s going to be a volatile session, especially with big names like IBM and Intel beating the estimates.

SPDR Financial (XLF) requested by Alex and Gene Carr

I mentioned last week that I wouldn’t be surprised if the financials bounced back from the recent levels.  Well, it certain won the battle this week against the bears.  Bullish news like Meredith Whitney upgrading GS rating and positive earnings reports from Goldman Sachs, Citi, and JPM certainly impacted the market.  With these news, the shorts quickly started covering the positions, further adding to this fast and furious rally. It’s now sitting at the 50 day MA and started to consolidate the last 2 days.  Next week should really help us assess their strength.  If you have been short, be prepare to manage risk by setting a stop-loss.

S&P 500 (SPY)

Now this is why you want to wait for a confirmation before you move into a position.  Everyone’s saying “head-and-shoulders” everywhere.  Well, even though it’s a pretty popular and reliable pattern, you really don’t want to jump the gun until you see some confirmation that it is truly a bearish trend.  “Head-and-shoulders” doesn’t mean much if it actually doesn’t continue its bearish trend.  As mentioned last week, it was sitting at a critical support level, and S&P  500 indeed bounced back strong, helped by various positive news this past week.  Now watch for the $95 range since it will be a pretty strong resistance to break through if SPY wants to continue this past week’s rally

United States Natural Gas Fund (UNG)

I personally bought some UNG last week for $12.52 and caught the huge rally.  I am still holding it but I do not like how it ended last Friday.  As you can see, it went above $13.50 but lost its steam by end of the day and closed barely above the Thursday close price.  This kind of strong resistance after the rally concerns me, and I would not be surprised if it starts to lose some of the gain from last week.  I’m going to assess the strength Monday/Tuesday, but I’m ready to take profit here already.

Research in Motion (RIMM) requested by Angela

RIMM started consolidating around the 61.8% retracement levels with several days ending in a Doji candlestick pattern (indecision).  Research in Motion certainly had a piece of last week’s pie, rallying nicely with the rest of NASDAQ.  Whether you’re short or long here, I would not make any moves quite yet.  I expect a choppy session given the upcoming earnings, so no reason to hurry into a decision.  Next week will be interesting as RIMM approaches the 50 day MA level.  If it breaks above and holds its position, shorts should prepare to set the stop-loss appropriately.

Ford (F) requested by Gene Carr

Ford (F) has been trading in a narrow range waiting for its next move.  Whether it’ll break the $6.5 resistance and continue higher or break through the $5 support level and start its decline will be challenging to assess.  Ford’s earnings report is coming up on the 23d so I suspect that will impact the price significantly.  I personally don’t like to mess with the earnings report, but just be prepared for a volatile session this week if you’re holding the stock.