ChartWatchers

HHH STARTS 2007 WITH A BANG

 | 

The Internet HOLDRS (HHH) started 2007 with strong move on good volume, but the ETF was knocked back on Friday and remains just short of breakout. Follow through is the key.

The Internet HOLDRS (HHH) formed a falling flag/wedge over the last six weeks. These are typical for mild corrections, but the correction is not over until there is a breakout. This week's surge carried HHH to the upper trendline and follow through above the December high at 55 would be most bullish. I would also like to see expanding volume for confirmation. Also note that Google (GOOG), Yahoo! (YHOO) and Ebay (EBAY) have similar patterns working and Yahoo! is taking the lead.

The January surge reinforces support at 52. There are a number of reasons for support at 52. First, HHH broke above the 200-day moving average in early November and this moving average now becomes support around 52. Second, the August trendline extends up to around 52 in early January and has been touched at least three times. Third, there is a small consolidation in late October and early November that argues for some support around 52 (gray oval). Failure to hold the early January gains and a move below the January low at 51.93 would be bearish for HHH.

HHH

Chip Anderson
About the author: is the founder and president of StockCharts.com. He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of StockCharts.com into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at StockCharts.com, and provides updates about new features or additions to the site. Learn More
Subscribe to ChartWatchers to be notified whenever a new post is added to this blog!
comments powered by Disqus