Archive for April 13th, 2006

  • Important level for S&P 500 (SPY)
    , April 13th, 2006 at 11:18 am


    This chart shows why the 129.40-129.50 level could be a strong level of resistance for the Spyders (SPY)

    First, one of the most simple rules of technical analysis is that support once broken becomes resistance, while this is not law, there is a strong tendency for “trapped” longs to want to sell stocks at a breakeven level. This level should also be heavily defended by short sellers who want to continue to control the trend.

    Second, the declining 5 day moving average will often act as an early level of resistance, it is found at 129.45 right now.

    Third, is the location of the daily “R2″ which often acts as resistance on an intraday basis.

    Given the low volume nature of the rally today it makes sense to be careful as the market approaches this potentially strong level of resistance.

    If somehow the market could rally above this level and stay up there on a strong volume rally it will have trapped the short sellers and will have others scrambling to get long, I only mention this because it could happen although I do not think it is very likely.

  • Important level for S&P 500 (SPY)
    , April 13th, 2006 at 11:18 am


    This chart shows why the 129.40-129.50 level could be a strong level of resistance for the Spyders (SPY)

    First, one of the most simple rules of technical analysis is that support once broken becomes resistance, while this is not law, there is a strong tendency for “trapped” longs to want to sell stocks at a breakeven level. This level should also be heavily defended by short sellers who want to continue to control the trend.

    Second, the declining 5 day moving average will often act as an early level of resistance, it is found at 129.45 right now.

    Third, is the location of the daily “R2″ which often acts as resistance on an intraday basis.

    Given the low volume nature of the rally today it makes sense to be careful as the market approaches this potentially strong level of resistance.

    If somehow the market could rally above this level and stay up there on a strong volume rally it will have trapped the short sellers and will have others scrambling to get long, I only mention this because it could happen although I do not think it is very likely.

  • CPST, CTLM, ZP
    , April 13th, 2006 at 8:35 am


    The daily chart of CPST shows a very healthy stock which experienced a low volume pullback to a prior level of resistance.

    Drilling down to the 10 minute timeframe of the last 10 days we can see that buyers regain control of the upward momentum as the stock can clear short term resistance at 4.12.

    The weekly chart of the last three years for Centillum Communications (CTLM) shows a nice longer term basing pattern which resembles a cup and handle. A move above the resistance at 4.70 would have long term bullish implications.

    The daily chart of CTLM shows buyers getting more aggressive with the recent high volume push followed by a low volume consolidation. A swing trader could look for a move up to the 4.70 level initially and then hopefully transition the trade into a longer term hold.

    Buyers regain control of CTLM as it moves past short term resistance at 4.30.

    I own a small postition in ZP and agree with the person who left a comment in yesterday’s post about a stop at 1.95. I plan on adding to this stock as it gains momentum and trades at or above 2.25. This is a speculative play on a short term catalyst potentially coming from media exposure stemming from the NY Auto Show.

    Besure to do your own research on these ideas, escpecially during earning season!

    **Check back later for more ideas**

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