Don't Ignore This Chart

Applied Optoelectronics Lengthens Downtrend, Approaches Next Major Support

Applied Optoelectronics (AAOI) was one of the darlings of Wall Street in 2017.....until early August.  Since that time, AAOI has declined nearly 60% in less than three months and has shown no signs of a reversal.  The most recent drop a little over a week ago was as a result of lowered revenue and EPS guidance and that jump started AAOI's move towards its next key support near 40.  Take a look at the chart:

Gap support from 37-40 needs to hold or AAOI will likely continue its downward spiral to the top of the previous gap near 27.  Volume trends are negative and note the SCTR has fallen from near the top of the stock universe in the upper 90s to 5 as of today.

Happy trading!

Tom

Three Pullbacks for Three Healthcare Stocks

Chartists should watch Gilead (GILD), Amgen (AMGN) and Merck ($MRK) because all three are forming bullish continuation patterns. First and foremost, all three hit new highs in September so it is safe to assume that the long-term trends are up. AMGN and MRK have been trending higher the last 12 months, while GILD broke out in June to reverse its downtrend. 

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Here's A Medical Equipment Company With A Near Perfect Seasonal Track Record In October And November

Over the past twenty years, Mettler Toledo Intl (MTD) has averaged gaining 23% per year, but that's not the most impressive performance stat for the company.  During the months of October and November, MTD has risen 85% and 95% of the time, gaining an average of 3.3% and 9.1%, respectively, during each of these calendar months.  Those aren't annualized returns, they're average returns for each month over the past two decades!  Check out the seasonality chart below:

The bullish performance during October and November really stands out for MTD, so it's no surprise that October 2017 has gotten off to another great start.  Here's the technical picture:

Following a strong uptrend in August and part of September, MTD consolidated for a couple weeks in a fairly narrow channel before breaking out to begin October - just in time for its seasonal period of strength.  While profit taking is to be expected, I'd look for the seasonal tailwinds to carry MTD to new heights over the next several weeks.

Happy trading!

Tom

Bank of America Holds above Breakout Zone $BAC

Bank of America (BAC) broke out of a large bullish continuation pattern three weeks' ago and this breakout is holding. Overall, BAC surged from June 2016 to February 2017 and then consolidated with a large triangle pattern. A consolidation within an uptrend is a bullish continuation pattern and the breakout around 25 signaled a continuation of this uptrend. The breakout zone around 25 turns into the first support level to watch. A close back below 25 would throw cold water on the breakout and warrant a re-evaluation. I would not, however, turn completely bearish because this would not be enough to reverse the long-term uptrend. The August lows mark key support for the long-term uptrend. The indicator window shows momentum improving as MACD turns up and moves above its signal line. 

Follow me on Twitter @arthurhill  - Keep up with my 140 character commentaries.

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Thanks for tuning in and have a good day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan
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Will Seasonal Tailwinds Stem The Tide Of Selling In This Technology Company?

Juniper Networks (JNPR) was under heavy selling pressure last week to open October, a seasonally bullish month for JNPR as the stock has averaged gaining more than 13% each October over the past two decades.  The irony here is that we've seen JNPR twice in recent years open October in the same bearish manner (black circles below) only to bounce off trendline support.  Check this out:

While JNPR has been able to maintain an uptrend over the past five years, it's fairly remarkable considering that its industry group - Dow Jones U.S. Telecommunications Equipment Index ($DJUSCT) - has badly lagged its technology peers over the same time period.

While last week was horrid for shareholders, the bullish engulfing candle on Friday (not shown in above weekly chart) suggests that October 2017 could mark a short-term bottom similar to October 2016 and October 2014.

Happy trading!

Tom 


 

Citrix Ends Correction with Five Week Surge

Citrix (CTXS), which is part of the Internet ETF (FDN) and Software iShares (IGV), appears to have ended its correction and resumed its long-term uptrend. The stock hit a 52-week high in early 2017 and then declined from May to August. CTXS underperformed the market and its peers during this timeframe, but the decline was a correction within a bigger uptrend. Notice that the move retraced around 61.8% of the prior advance and formed a falling channel. The retracement amount and pattern are typical for corrections. CTXS broke out of the channel with pretty convincing a five week advance. This move looks long-term bullish and a continuation of the bigger uptrend would target a move to new highs in the coming months. 

Follow me on Twitter @arthurhill  - Keep up with my 140 character commentaries.

****************************************
Thanks for tuning in and have a good day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan
*****************************************

Bullish Momentum Building Again On AMD

Advanced Micro Devices (AMD) spent over a year with its SCTR among the highest of all individual stocks.  It was an impressive rally for sure as its stock price rose from below $2 to above $15 in 13 months.  But even the hottest stocks need to evenually consolidate to unwind perpetually overbought conditions.  AMD has been doing that, frustrating thousands of traders.  I don't believe this bullish story is over yet.  In fact, I view the consolidation as a very bullish ascending triangle pattern with volume picking up today to perhaps close at a 2 1/2 month high by 4pm EST.  We'll see.  In the meantime, I fully expect to see AMD challenge its double top and triangle resistance as shown below on this weekly chart:

Over the past 2-3 weeks, the SCTR has skyrocketed back above 80 and when AMD finally makes its ascending triangle breakout, I suspect that its SCTR will move back up into the high 90s as AMD regains its leadership role on the NASDAQ.

Happy trading!

Tom

Comcast Fails at a Key Moving Average

A recent double top and failure at the 200-day SMA point to lower prices for Comcast (CMCSA). The double top formed from May to early September with two highs around 42 and a low around 38. Comcast broke this low with a sharp decline and then became oversold. The stock bounced back to the break zone and the 200-day SMA in in the second half of September, but turned lower the last four days and this solidifies the double top break. Also notice that a rising flag formed and the stock broke the flag line this week. The indicator window shows the PPO (5,30,5) turning down and breaking its signal line. Based on the height of the double top (4 points), the downside projection is to around 34. This is my target as long as resistance at 39 holds. 

Follow me on Twitter @arthurhill  - Keep up with my 140 character commentaries.

****************************************
Thanks for tuning in and have a good day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan
*****************************************

Is Now The Time To Jump In F5 Networks?

F5 Networks (FFIV) has a seasonal history of performing extremely well in October and November, but technically the stock has been a wreck since topping in March 2017 and the early October returns haven't been very good either.  There is hope, however, in the form of upcoming price support and it appears as though longer-term weekly momentum could be turning as well.  Check out this weekly chart:

Continue reading "Is Now The Time To Jump In F5 Networks?" »