RealMoney Charts: February 20, 2008
Here are the charts that will be featured in my February 20th column on RealMoney.com:CME, CSCO, EMC, GRMN, FTI and FTE
Over the past year, each time CME fell to $500, sufficient buying pressure soaked up all the supply. But the more often a support level is tested, the more likely it is to fail. I’d stop playing the “hope” strategy and put a stop just below $500.
There is just no defending CSCO right now. It’s true that the farther CSCO falls, the cheaper it gets. But with such steady downside momentum, I think CSCO will get even cheaper than it is now. If you’re a bull, be a patient bull.
EMC looks quite a bit like CSCO, with the 20-day exponential moving average acting as resistance on any rally. With $15 being the last low, I’d suggest putting a stop just below that level.
This daily chart of GRMN is just plain sloppy and gives us almost no edge. But if you’re thinking about buying, watch out for two roadblocks that just might otherwise be missed on the GPS screen. First, the November low at $80 could derail any rally as prior support often serves as future resistance. Next, the 50-day moving average is at almost the same level — at $81.34 and falling fast. The 50-day moving average often harbors limit sell orders that will quell any rally. Know what I’d do? I’d look for something else!
FTI is right back at the key $55 level. In November and December, the stock rallied from each tag of $55. But once that level broke down in mid-January, $55 became resistance. At the same time, the 50-day moving average is homing in on that same level, offering another source of selling pressure. So, until the bulls can push the stock above $55, I’d take a pass. No sense holding a stock that is making lower highs and lower lows.
FTE is a troubled stock. After peaking in November, the stock has been slowly grinding downward in a series of lower highs and lower lows. With the 50-day moving average currently acting as resistance on rallies, I’d wait for the next rally to test that key indicator — then I’d get short.
Be careful out there.