Thursday Feb. 25 Premarket Analysis
Today in the Stock Market
Dear Fellow Traders
Comments from Fed Chairman Ben Bernanke helped to calm investor jitters Wednesday afternoon and helped to Dow Jones Industrial Average reclaim most of the ground in lost in Tuesday’s sell off. Bernanke was on Capital Hill for his first of two day’s of testimony. He was quick to reassure Congress that the bank does not expect to raise rates in the near future. This comes after the Fed surprised the markets last week by raising the discount rate, which is the rate the Fed loans money out to commercial banks. The news helped to propel the Dow Jones Industrial average up 91 points. The index started the day at 10,284 and in the late morning managed to hit a 10,393. But gains were limited and the stock managed to settle modestly lower at 10,374.
The tech sector also had a strong day and was able to erase most of the losses on Tuesday. QQQQ, the ETF of the NASDAQ Composite gapped higher in the morning, opening at $44.41. After the bell the stock dipped modestly hitting a low of $44.32 but quickly rallied to its intra-day of $44.79. It was relatively quiet trading for the rest of the day and the ETF settled slightly lower at $44.61, which is also the 20-day moving average.
The comments from the Fed Chairman only had a modest impact on the U.S. dollar and as a result gold prices remained under pressure. GLD, the most popular gold ETF continues to trade lower and only sent a brief time above $108. The ETF opened at $107.33 and managed to hit a high of $108.16. It was in a strong down trend for most of the day hitting a low of $107.10. GLD managed to move slightly higher closing at $107.36.
It was a big day for the pick we released last night, SNWT. The stock was under significant pressure for the last three sessions and we thought the pull back was a good buying opportunity. Wednesday morning the stock broke its down trend, gapping high to open at $0.135, which was also the low of the day. Strong buying pressure helped to push the stock to a high of $0.155, which represents a 20% increase from Tuesday’s closing price. If volume increases through the rest of the week we could see it re-test it recent highs of $0.21.
It was also a positive day for our pick WDRP. The stock gapped higher in the morning, opening at $0.0215. After the bell the stock dropped slightly hitting a low of $0.021. This must have created a buy signal because the stock then drove to a high of $0.025. WDRP finally settled to close at $0.024. Volume has dropped slightly compared to the last six sessions but still remains well above its average. More than 15 million shares were traded on Wednesday.
It was an interesting day for BHWX. The stock is finding good support at $0.60. On Wednesday BHWX opened at $0.65 and quickly dropped to its low of $0.60. What is interesting is $0.61 represents its 20-day moving average. A break though this must have created a strong buy signal because investors drove the price up close at its opening price. Volume is also starting to slowly increase. 644,000 shares were traded during the day.
It was a down day for CBBV but I am not reading too much into this sell-off because of the extremely low volume. Only 62,000 shares were traded on Wednesday. The stock gapped lower in the morning, opening at $0.175 and managed to rally to a high of $0.20. Selling pressure in the afternoon caused the CBBV to fall to a low of $0.153. The stock managed to settle slightly higher closing at $0.17.
HSCO is a stock that we have been watching for the last few days. We admit that the low volume has created an ugly chart but I like the fact that volume shot higher on Wednesday. More than 100,000 shares were traded during the session. The stock gapped lower, opening at $0.80 and dipped further into negative territory hitting a low of $0.70. However the bulls jumped in and managed to drive the stock to a high of $0.99. This level also represents the 20-day moving average. A confirmed break of this price could trigger a buy signal.
I am also starting to see volume improve on AGCZ. Over half a million shares were traded on Wednesday. The candlestick pattern could be the start of a reversal. The stock opened at $0.15 and quickly fell to a low of $0.10. However, investors saw this as a bargain and managed to drive the price higher to close at $0.13.
Have a Great Trading Day
Francis
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