Tuesday Feb. 23 Premarket Analysis
Today in the Stock Market
Dear Fellow Traders,
On Monday I was looking for a pullback and I was not disappointed. In fact I am encouraged because the selloff in the Dow Jones Industrial Average was not as big as I thought it was going to be. According to some of the articles I have been reading a lot of traders are sitting on the sidelines to wait and hear what Fed Chairman Ben Bernanke has to say when he gives his semi-annual testimony before the Senate and the Congress on Feb. 24 and 25. I am expecting the Dow to trade sideways around 10,400. On Monday the index opened at 10,402 and managed to rally to a high of 10,433 before dropping to a low of 10,368. By the end of the day the market managed to settle slightly higher, closing at 10,383. Volume was relatively low, which is a good sign that investors are waiting to hear what Bernanke has to say about future interest rates. Positive earnings from Lowes could have sparked the rally in the morning. The strong results could be an indicator that the housing sector is starting to improve.
There was a modestly bigger sell-off in the tech sector Monday compared to the general market. Again this move is not surprising. After the six-session rally you really have to start wondering just how many buyers remain in the market place. QQQQ, the ETF of the NASDAQ Composite did not spend much time in positive territory. The ETF opened at $45.01 and hit an intra-day high of $45.03. Sellers quickly stepped in to fill the void and drove QQQQ to a low of $44.56. Now that the dust has settled the stock closed the day slightly higher at $44.74. As with the Dow we could expect either consolidation or a healthy pullback…there are definitely signs of market reversal for the short term…
Traders continue to watch the debt situations in Europe. There are still some concerns that Greece will not be able to fund their debt obligations. That has put pressure on the euro and helped push the U.S. dollar higher. And we all know the impact a strong U.S. dollar has on commodity prices, in particular gold. GLD, the biggest gold ETF spent most of the day in negative territory. But it is not all bad news. The ETF continues to hold most of its gains made last week and is holding support just above $109. The ETF started the day at $109.86 and managed to hit a high of $109.97. However the gains were not sustainable and GLD dropped to a low of $108.66. Later in the afternoon the stock managed a modest rally and closed at $109.07.
It was another strong day for WDRP. It appears to be finding some support at $0.02 and there is very strong volume so this tells me that these higher prices could be sustainable. The stock gapped higher at the bell, opening at $0.0245. After momentum has been strong on this stock and traders were able to push the stock to its intra-day high of $0.0275. This however created a strong sell signal and bears were able to push the price to its low of $0.02. We have recommended this area as a buying opportunity and we were right because bulls once again stepped in a drove the price higher closing at $0.0235.
Our latest pick, CBBV also had a very good day and was able to hold on to most of its gains after gapping higher at the open. On Monday the stock opened at $0.27 and quickly rallied to a high of $0.29 but as with most gaps there was a lot of selling pressure and bears were able to drive the stock to a low of $0.17. However the bulls steadily made gains and drove the price back up to close at its opening price.
The price action we saw in BHWX confirms the reversal of its down trend. The stock also had a strong open with a big gap and a quickly rally. The stock opened at $0.61 and quickly rallied to a high of $0.65. However these gains could not be sustained and BHWX dropped to a low of $0.60. This price previously acted as a strong resistance point and now it could act as a strong support point. Investors jumped back into the stock and it managed to sell at $0.63.
BYSD continues to confirm a reversal and on Monday the price action formed an even stronger hanging man than on Friday. Monday’s positive close shows that momentum is starting to turn and buyers are starting to outweigh sellers. The stock opened at $0.27 and hit a low of $0.25. This drop caused a buy signal and the stock rallied to close at $0.275.
RVBF continues to consolidate with very low volume, which makes it hard to predict any move one way or another. The stock opened at $0.065 rallied to a high of $0.075 and then managed to close at Friday’s closing price of $0.07.
Finally, HSCO remains on our watch list. This stock continues to trade with very low volume but it is close to breaking its recent down trend. The stock has been in a down trend after its Jan. 21 high of $1.30. The stock opened at $0.99 but the extremely low volume helped it to drop to a low of $0.75.
Have a Great Trading Day!
Francis
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