Monday, October 1, 2012

SPX at a crossroads

SPX Daily
When I shorten up this daily chart to start in mid-June, there are 3 high volume zones worth paying attention to. This morning's action gapped it up into the lower end of that 1458-1465 zone and the bears stepped in from there. I think we are at a crossroads here. The middle volume zone isn't that heavy, but it's where the bulls stepped in a few days ago, so it's worth watching. A close under that 1430ish level points to a test of the 50day SMA at 1413ish.

S&P Futures Daily
S&P futures have now closed 5 days in a row under the 20day WMA (currently 1441ish). I think we will see follow through to the downside tomorrow and I drew in a potential scenario going forward. Obviously the action can change quickly, and if the bulls hold this 1425ish level (1430 SPX), we could just start grinding back to the 1460's again. Time will tell.

PRUnes - are 3 enough? Are 6 too many?

PRU Daily Chart (11:30)
If you squint your eyes you may be able to see a cup with handle there that has come back to the breakout level.  The 200 day looks like good support and the 50 day is pushing from beneath and will put the stock back into a bullish configuration soon.  The bullish configuration is 20 day over 50 day over 200 day simple moving average.

This could be a good place to start a position.  The trailing P/E is just 7.75 and forward P/E is under 7.  The company pays a dividend that yields 2.66%.   A stop under the 50 day would be reasonably tight.

Movin' on up .... from NOK and RIMM to AAPL and Samsung

Gator's Chart of the Day: RFMD
Rf Micro Devices Inc was found to be in the Apple iPhone5 and is already in several Samsung phones.  RFMD makes chips that control antennae in both 3G and 4G wireless handsets.  Their largest customers used to be Nokia and Research in Motion.  Now the top customers are Samsung and Apple.  This change bodes well for future earnings.

The chart shows the stock has not been a pillar of strength.  The commonly watched moving averages (20, 50 and 200 sma) are beginning to transition from the bearish configuration with 200 on top, 50 in the middle and 20 on the bottom as the 20 has now moved above the 50.  The stock has recently pulled back after testing the 200 day and appears to have found support (maybe) just above the 50 day.

The Trade  
If the stock shows a little strength a partial position could be established with a stop just under the 50 day.  With a price under 4.00 a move of only a few pennies can be several percentage points so don't let things get out of hand with your trade.  There is a lot of trading that happened around 4.00 and Stockta.com shows 4.02 to be a level of significant resistance.  If the stock clears 4.10 you may choose to add to your position but it is likely to take some time to clear the 200 day unless some significant catalyst is identified.