Thursday March 11 Premarket Analysis
Today in the Stock Market
Dear Fellow Traders,
The tech sector continues to move higher and we now have to go back to 2008 to find any sort of resistance levels. With the recent bullish sentiment in the marketplace, it is hard to determine when the sector will start to run out of steam. QQQQ, the ETF of the NASDAQ Composite could hit some strong resistance at $48, which was close to the August 2008 highs. We can see from the long term chart that that price broke just over $48 before falling sharply, creating one the biggest financial crisis in recent history.
On Wednesday the ETF started the day at $46.80, which was the low point, rallied to a high of $47.28, then closed at $47.17. Volume remains relatively strong for QQQQ and is helping to support these higher prices.
The tech sector has fared a lot better than the general market. The recent rally in the Dow Jones Industrial Average appears to be running out of momentum. The index has traded in a relatively tight range in the last three sessions. On Thursday the stock opened 10,560 and hit a low of 10,526 early in the morning. After the sell-off, investors were able to push the Dow to a high of 10,567.
Gold was hit with another strong wave of selling, which caused it to drop sharply on Wednesday. There was high volatility in GLD, the biggest gold ETF, as it swung in a $2.50 dollar range. The ETF opened at $109.94 and after a dip into negative territory rallied to a high of $110.50. However by noon the bears were in full control of GLD. The selling pressure caused the ETF to hit a low of $108.02. It managed to rally modestly higher in the late afternoon to close at $108.47.
I have said a few times that traders need to learn to be patient. We have been waiting for a big push in SNWT and on Wednesday we finally got it. The stock has traded around $0.11 for the last five sessions but its consolidation appears to be over. The stock opened at $0.115 and hit a low of $0.11. However this dip must have created a strong buy signal because investors managed to drive the stock to a high of $0.152, which is where it closed. This is a gain of 38%! with Wednesday’s strong close there is not much standing in the way of February’s high of $0.21. The consolidation of the last few days was a sign that something was about to happen and it did…
We saw some strong profit taking on our latest pick, CIST. The stock gapped higher at the bell and opened at $0.39. The stock quickly rallied to a high of $0.43. This high created a strong sell signal, which caused CIST to drop to a low of $0.31. The stock managed to rally slightly higher to close at $0.345. More than 800,000 shares were traded on Wednesday and I am expecting the stock to trade around this price for a while.
KNDR, which has been on our watchlist for a while, continues to make surprising moves. The stock broke through support at $0.05 on Wednesday. It has been trading in a tight range, with support at $0.05 and resistance at $0.06 since mid-February. We see this as a buy opportuniyty. Because of the low volume, it is more likely the stock will move back into its established range.
KNDR opened the day at $0.05 and hit a high of $0.06 before strong selling pressure drove it to a low of $0.049, where it closed. More than 90,000 shares were traded on Wednesday, which is strong but appears to be below the daily average.
We have been watching LTUM for the last few days and we could be in a consolidation period. The price action this week helped to confirm the reversal of its pullback but on Wednesday the stock ran into a wall. LTUM gapped in the morning and opened at $1.29 then quickly rallied to a high of $1.30. This helped to weaken some of the recent momentum and created a profit taking opportunity for investors. The selling pressure caused the stock to drop to a low of $1.25. LTUM managed to rally slightly higher to close at $1.26.
On Tuesday we mentioned a stock that we were watching, GETA. We wanted confirmation for higher prices and we did not get it. The stock gapped lower on very strong volume so we are going to put it on the backburner for now.
There is another stock that is on our watch list that I wanted to mention, KATX. This stock is similar to GETA because we need to wait for confirmation. Recently, the stock has traded in a tight range and traded most of Wednesday between its 20-day and 50-day moving average. The stock opened at $0.057, which was its session high, and hit a low of $0.051. KATX managed to rally modestly higher in the afternoon and closed at $0.0525.
Have a Great Trading Day!
Francis
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