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Fibozachi Forecast: Week of April 5th

Last week, one of our 3 bullish candidates, DNR, was the 2nd greatest gainer (+11.2%) across the S&P 500. This week, after sifting through our scans on Friday night, two underlying themes stood out: energy patch up, consumer discretionary down.
With oil completing a follow-through to the upside from a large “W”
pattern on the daily, natural gas hinting at a major swing low across
daily, weekly and monthly profiles, ‘commodity-related’ currency crosses
positioning themselves for sharp relief rallies, the US equity market
looking for a new group / sector leader to push the S&P 500 cash
(INX) through 1182, and a veritable VLCC (very large crude
carrier) of proprietary ‘buy warning’ signals plotted … price action
across the entire energy complex could become impulsively explosive to
the upside this week.
While only a handful of individual issues are highlighted here, we must
underscore the extraordinary breadth of energy issues registering
proprietary ‘buy warning’ signals alongside very bullish technical
setups. The energy patch, utilities included, appears primed to pump
higher.
Have a great week !
- Fibozachi & Chopshop
Short
Trade Candidates
DELL: DELL (Short-Term to Intermediate-Term)
Current Price: 15.03
Candlestick Patterns: Filled
White
Dell had rallied into last week, but now appears to have lost most of
its bullish momentum. An extremely narrow range, filled white candle
registered within the trading range of last week. Last week’s high of
15.20 also failed to push above the prior week’s high of 15.25, which
will be our approximate stop for this trade.
Entry: Immediate (with daily
confirmation) or with a move below 14.83
Target (Short-Term): 14.00
Target (Long-Term): 12.75
Stop-Loss: 15.27 or higher
Potential Risk: $0.24
Potential Reward (Short-Term):
$1.03
Potential Reward (Long-Term):
$2.28
Risk: Reward Ratio: 1: 4.3
& 1: 9.5
NKE: NIKE
(Intermediate-Term to Long-Term)
Current Price: 74.11
Candlestick Patterns: Bearish
Squeeze Alert, Filled White
NKE has closed higher for 8 consecutive weeks … a Fibonacci number that
often coincides with cycles on both daily and weekly charts.
Interestingly, each of the last 2 weeks has been engulfed by the trading
range of the week before, registering a “Bearish Squeeze Alert”
candlestick pattern. We are going to try to catch an intermediate to
long-term top here, which has the potential for some large gains. Be
aware that the level 70.00 may provide strong support and delay a move
down to 61 - 67.
Entry: Immediate (with daily
confirmation) or with a move below 72.78
Target (Short-Term): 66.62
Target (Long-Term): 60.89
Stop-Loss: 74.84 or higher
Potential Risk: $2.06
Potential Reward (Short-Term):
$6.16
Potential Reward (Long-Term):
$11.89
Risk: Reward Ratio: 1: 3
& 1: 5.8
PCLN: PRICELINE.COM (Short-Term to Long-Term)
Current Price: 257.00
Candlestick Patterns: Doji
PCLN registered a nearly perfect Doji by opening at 257.12 and closing
at 257.00, a difference of 0.05%. This may put a halt to the
never-ending rally for the time being and the extremely narrow range of
last week allows for an extremely tight stop with some juicy downside
profit targets. A break of the sharply rising trendline of support will
likely have very bearish implications moving forward.
Entry: Immediate (with daily
confirmation) or with a move below 252.00
Target (Short-Term): 231.49
Target (Long-Term): 192.72
Stop-Loss: 263.00 or higher
Potential Risk: $11.00
Potential Reward (Short-Term):
$20.51
Potential Reward (Long-Term):
$59.28
Risk: Reward Ratio: 1: 1.9
& 1: 5.4
F: FORD MOTOR (Intermediate-Term to Long-Term)
Current Price: 12.69
Candlestick Patterns: None
Ford’s rally has now carried from 1.01 to 14.54, which enables fantastic
risk: reward trading setups for a longer-term trade. The (sloppy)
shooting star two weeks ago may have marked a multi-month high just shy
of 15.00. While Ford may not immediately plunge over the short-term,
the price zone of 8.75 - 10.50 is likely to act as a “price magnet” once
the bearish momentum picks up.
Entry: Immediate (with daily
confirmation) or with a move below 12.42
Target (Short-Term): 10.41 -
8.86
Target (Long-Term): 6.54
Stop-Loss: 13.29 or higher
Potential Risk: $0.87
Potential Reward (Short-Term):
$2.01 - $3.56
Potential Reward (Long-Term):
$5.88
Risk: Reward Ratio: 1: 2.3 -
4.1 & 1: 6.8
BIG: BIG LOTS (Short-Term to Long-Term)
Current Price: 36.82
Candlestick Patterns: None
BIG failed to grab a new high last week by 17 cents before proceeding a
sell-off that picked up some bearish momentum by week’s end. We are
looking for a quick continuation move down to our first target at 33.70 -
34.00, but the ‘real’ support level and ideal profit target is 31.00 -
31.50.
Entry: Immediate (with daily
confirmation) or with a move below 35.80
Target (Short-Term): 31.39
Target (Long-Term): 28.50
Stop-Loss: 37.65 or higher
Potential Risk: $1.85
Potential Reward (Short-Term):
$4.41
Potential Reward (Long-Term): $7.30
Risk: Reward Ratio: 1: 2.4
& 1: 4
HD: HOME DEPOT (Short-Term to Long-Term)
Current Price: 32.20
Candlestick Patterns: None
Home Depot appears to have met some resistance at 33.00 and now offers a
nice risk: reward trade setup after 3 weeks of consolidation. While
the 31.00 level may initially provide support, it is likely to
eventually give way for a move back down to 27.50 - 29.50.
Entry: Immediate (with daily
confirmation) or with a move below 31.96
Target (Short-Term): 29.44
Target (Long-Term): 27.19
Stop-Loss: 32.89 or higher
Potential Risk: $0.93
Potential Reward (Short-Term): $2.52
Potential Reward (Long-Term):
$4.77
Risk: Reward Ratio: 1: 2.7
& 1: 5.1
HAS: HASBRO (Intermediate-Term to Long-Term)
Current Price: 38.35
Candlestick Patterns: None (almost a Shooting
Star)
Toys are looking ‘toppy’ here … last week almost registered a Shooting
Star candlestick pattern, while plotting an intra-week high of 39.59.
This looks like a great spot for a FNH (Failed New High) to occur; just
below the August ‘08 highs at 41.68. A reversal here is likely to head
back down to support at 36.00, but both support and a large unfilled gap
remain at 32.75. It may take some time, but this gap will be filled.
Entry: Immediate (with daily
confirmation) or with a move below 38.10
Target (Short-Term): 35.80
Target (Long-Term): 32.75
Stop-Loss: 39.23 or higher
Potential Risk: $1.13
Potential Reward (Short-Term):
$2.30
Potential Reward (Long-Term):
$5.35
Risk: Reward Ratio: 1: 2
& 1: 4.7
MAT: MATTEL (Intermediate-Term to Long-Term)
Current Price: 22.61
Candlestick Patterns: None
Interestingly, Mattel’s chart is very different from that of Hasbro; yet,
both suggest that a top may be in for the ‘toymakers’. MAT registered a Bearish Harami two weeks ago and followed it up with a sell-off into
the end of last week. While it is possible that a small reflexive
bounce or some sideways consolidation may occur over the next week or
two, any increase in bearish momentum from this point ought to send
shares back towards initial support at 21.00, with 19.00 as the next
stop.
Entry: Immediate (with daily
confirmation) or with a move below 22.49
Target (Short-Term): 21.05
Target (Long-Term): 19.07
Stop-Loss: 23.48 or higher
Potential Risk: $0.97
Potential Reward (Short-Term):
$1.44
Potential Reward (Long-Term):
$3.42
Risk: Reward Ratio: 1: 1.5
& 1: 3
Long
Trade Candidates
UNG: NATURAL GAS ETF (Short-Term to Long-Term)
Current Price: 7.35
Candlestick Patterns: None
(almost a Bullish Harami)
UNG put in a bullish engulfing, wide-range candle last Friday, which may
very well mark a swing low over the next several months. The weekly
candle almost registered a Bullish Harami candlestick pattern; however,
the trading range was larger than last week’s, thereby invalidating a
‘true’ pattern. Nevertheless, it appears that a Fibonacci-based,
13-week High-to-Low cycle may play out and finally lead to the reversal that
so many traders have been awaiting.
Entry: Immediate (with daily
confirmation) or with a move above 7.42
Target (Short-Term): 8.50 –
9.00
Target (Long-Term): 11.00
Stop-Loss: 6.79 or higher
Potential Risk: $0.63
Potential Reward (Short-Term):
$1.08 - $1.58
Potential Reward (Long-Term): $3.58
Risk: Reward Ratio: 1 : 1.7 -
1: 2.5 & 1: 5.7
CNX: CONSOL ENERGY (Short-Term)
Current Price: 44.06
Candlestick Patterns: Bullish Harami
While most energy stocks are looking bullish heading into next week, CNX’s
trade setup looks ideal for a short-term pop over the next few weeks.
If our entry price triggers, it is likely that CNX will push up towards
48.00, which is near the 50% retracement of the previous decline from
roughly 55 to 42. However, a recent gap remains unfilled between 51.00
and 52.50 and CNX may be able to grab it with one last bullish push
before the buyers completely exhaust themselves.
Entry: Immediate (with daily
confirmation) or with a move above 44.26
Target (Short-Term): 48.00
Target (Long-Term): 52.56
Stop-Loss: 41.79 or lower
Potential Risk: $2.47
Potential Reward (Short-Term): $3.74
Potential Reward (Long-Term): $8.30
Risk: Reward Ratio: 1: 1.5 & 1: 3.4
AES: AES (Short-Term - Intermediate-Term)
Current Price: 11.30
Candlestick Patterns: Bullish
Harami
Another energy stock candidate, AES has been weak since the end of ’09
and after back-to-back hammers failed to produce a reversal 4 weeks ago, last week’s picture-perfect Bullish Harami managed to
find support at 10.75. Energy stocks tend to have great volatility, so
if this trade works we expect to hit our targets without too much delay
or consolidation.
Entry: Immediate (with daily
confirmation) or with a move above 11.37
Target (Short-Term): 12.50
Target (Long-Term): 14.24
Stop-Loss: 10.64 or lower
Potential Risk: $0.73
Potential Reward (Short-Term):
$1.13
Potential Reward (Long-Term):
$2.87
Risk: Reward Ratio: 1: 1.6 & 1: 3.9
FE: First
Energy (Short-Term - Intermediate-Term)
Current Price: 39.40
Candlestick Patterns: Bullish
Harami
After an intense 7-week sell-off that began on January 1st, 2010, First
Energy has been moving sideways in a consolidation phase for the
last 7 weeks. If there is going to be any bounce or upward retracement,
it is likely to take place sooner than later. Last week’s Bullish
Harami may prove to be the kick-off point for a short-term rally. Like other energy stocks highlighted, this is another fantastic risk: reward trade
setup.
Entry: Immediate (with daily
confirmation) or with a move above 39.58
Target (Short-Term): 41.57
Target (Long-Term): 44.79
Stop-Loss: 38.29 or lower
Potential Risk: $1.29
Potential Reward (Short-Term):
$1.99
Potential Reward (Long-Term):
$5.21
Risk: Reward Ratio: 1: 1.5 & 1: 4
MFE: McAfee
(Short-Term - Intermediate-Term)
Current Price: 40.17
Candlestick Patterns: Mirror
Doji (top & bottom shadow are of equal length)
Every 3-4 weeks, McAfee exhibits the kind of volatility that traders
dream of; so long as they are on the right side of things. Though the
42.00 level may provide early resistance (thereby resulting in just a
3% gain) there are an overwhelming amount of short-term bullish
divergences, which could result in an extended move towards 45.00.
Entry: Immediate (with daily
confirmation) or with a move above 40.72
Target (Short-Term): 42.00
Target (Long-Term): 45.50
Stop-Loss: 39.85 or lower
Potential Risk: $0.32
Potential Reward (Short-Term):
$1.28
Potential Reward (Long-Term):
$4.78
Risk: Reward Ratio: 1: 4 & 1: 14.9
QID: Ultra-Short
QQQQ (Short-Term - Intermediate-Term)
Current Price: 16.78
Candlestick Patterns: Doji,
Hollow Red
Yes … one of the ‘longs’ is a leveraged inverse of the QQQQ. This is
for those who do not have the ability to short stocks in their brokerage
accounts and, instead, must rely on inverse ETFs in order
to achieve the same effect. This one is plain and simple folks … while the Q's eeked out a new low last week by just 6 cents they still
managed to close higher than the week’s open. We have a great
opportunity to catch a HUGE move here, while only risking a 3.7% loss if
we are wrong.
Entry: Immediate (with daily
confirmation) or with a move above 17.04
Target (Short-Term): 18.27
Target (Long-Term): 20.10 -
22.15
Stop-Loss: 16.38 or lower
Potential Risk: $0.66
Potential Reward (Short-Term):
$1.23
Potential Reward (Long-Term):
$3.06 - $5.11
Risk: Reward Ratio: 1: 1.9 & 1: 4.6 - 1:
7.7
Disclosure:
no position in the securities mentioned at the time of publication.
During any given session, we may trade any instrument
bi-directionally.
For similar technical calls and insights
into the idiosyncratic machinations of financial markets ~ check out fibozachi.com.
There, you can view a body of our
analytic work as well as detailed explanations of the unique design
development and technical methodologies within the proprietary technical
indicator packages that we employ daily to perform a comprehensive
technical analysis of financial instruments (stocks, options, ETFs,
bonds, futures, FOREX, etc.) across interval periods of time, tick, volatility and volume.
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Thanks a trillion Chopshop
Long UNG just destroyed any credibility you had left.
top performing non-ultra ETF of the day, up 3.5% 70 minutes into the session on 63.6% of 90 day avg volume at 12:00, for a possible weekly setup ... care to raise a technical point? discuss how natural gas tends to exhibit brief periods of extreme volatility? or compare historical data & your indicators on 3rd derivatives of volume and volatility? welp, thanks anyway. i'm glad we each found the time to share in this fruitful discussion.
Meanwhile:
HUANG JIN SAN BAMEN!!
GBPUSD daily chart is bullish.
http://www.zerohedge.com/forum/latest-market-outlook-0
Thanks guys, keep those charts coming.