More Thoughts on U.S. Stocks from a UK Chartist
By Zak Mir of Zaks-ta.com*
Posted: Mar 17, 2006
When last we met (in my article posted here in January of 2006), I had offered some insights into the psychology of trading. In this article, let me offer my viewpoints on three U.S. stocks of interest of late.
Sandisk (SNDK):
On a fundamental level, I have to confess that memory cards are a personal favorite, so much so that I asked for one for Christmas. But, irrespective of my personal likes and dislikes, it can be seen how there is plenty of action on the Sandisk chart. The big highlight in recent days has been quite a spectacular rebound, which I was waiting for at $56.
But, what happened -- as normally happens -- is that there was a slight overshoot on the downside to $55 before a ferocious bounce got underway. What can be said now is that, after the sharp move, we at least need to see an end-of-day close above the 20-day moving average at $61.26 and, preferably, above the 50-day line at $64.81 before assuming that the ultimate target at the September resistance line of $90 is on its way.
Google (GOOG):
The reason I was looking for a rebound in Sandisk is because there had already been one from the 2005 uptrend line on the Google chart near $340. As all tech stock followers will be aware, the reaction from this line has been just as explosive as we have come to expect from this market leader, and the only question now is whether we will see a return to the dizzy heights of $400 plus.
What can be said is that one would expect a test of the January resistance line at $395. An end-of-day close above this could ensure that we at least see a decent attempt at filling the post results gap down above $405. But, that said, there is still a tough job ahead for the bulls as far as reaching the eventual June resistance line target above $510.
Only an end-of-day close below the 20-day moving average at $376 immediately undermines a positive scenario.
Research in Motion (RIMM):
My first reaction as far as the ongoing BlackBerry legal battle is this: Why can’t this situation just be resolved one way or the other quickly? In fact, although markets are supposed to dislike uncertainty, it can be seen how having the sword of Damocles over its head has not actually damaged the RIMM share price as much as one might have expected.
That said, the overall trend is down, something highlighted by a red line of resistance running through $78 from last June. This implies that, unless we at least see an end-of-day and, preferably, an end-of-week close above this level, the shares remain a sell into strength.
The best sell signal would be a break of the October support line at $69 accompanied by the RSI falling below the neutral 50 level.
*Reprinted (and modified) with permission from Zak Mir, of Zaks-ta.com
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