Tuesday March 16 Premarket Analysis
Today in the Stock Market
Dear Fellow Traders,
Investors appear to be a little hesitant ahead of the FOMC interest rate decision, which comes out this afternoon. On Monday the Dow Jones Industrial Average appeared to hit a brick wall but a last minute rally helped push the Dow to a new monthly high. According to some articles I was reading, a lot of investors are watching the 10,600-10,700 level very closely. A strong close above that level could signal another push higher in the index.
The Dow opened at 10,623 and hit a high of 10,637. This created some selling pressure, which drove the stock to a low of 10,570. The index breaking below 10,600 could have sparked the rally. The Dow managed to close at its high of 10,642.
The tech sector is struggling to hold on to its recent gains. QQQQ, the ETF of the NASDAQ Composite, hit a new high for the year on Friday but was under significant pressure on Monday. The ETF gapped lower Monday morning and opened at $47.26 and managed to rally to Friday’s closing price of $47.38. However, the bears were in full control and drove the price to a low $46.91. QQQQ closed slightly higher at $47.24.
Gold prices have stopped their decline, at least for now. GLD, the biggest gold ETF appears to be finding support around $108. On Monday the ETF gapped higher from Friday’s close and opened at $108.16. Brief selling pressure caused GLD to drop below $108, hitting a low of $107.82. This break must have created a strong buy signal because investors were able to push GLD to a high of $108.56. The ETF closed modestly lower at $108.36.
We were expecting a strong open for our latest pick, BONZ and we were not disappointed. The stock gapped higher from Friday’s close and opened at $0.035. BONZ quickly rallied to a high of $0.039 before falling under some selling pressure. The problem we normally face when a stock gaps higher is that it runs out of momentum. However that was not the case for BONZ. The stock hit a low of $0.032, which was Friday’s closing price but investors were able to drive it back into positive territory. BONZ closed the day at $0.037.
KNDR continues to trade in its new range but it is suffering from low volume. On Monday the stock opened at $0.047 but fell under significant selling pressure, hitting a low of $0.045. I was expecting this price to act as initial support. From this price investors were able to drive the stock to a high of $0.049. Only 20,000 shares were traded during the day and the low volume makes it difficult to predict any short-term price action.
KATX remains on our watch list as it continues to trade within a range established between its 20-day and 50-day moving average. The stock opened at $0.054 and in its first hour of trading, hit both its intra-day high and low. At the open, KATX fell to Friday’s closing price of $0.052, which was its 50-day moving average. The low price could have created a strong buy signal, which drove the price to its high of $0.06. The stock settled modestly lower and closed at $0.055. This was just below the 20-day moving average of $0.057.
After scanning the market, there are a few stocks I am adding to our watch list – the first is NRTLQ. Currently Nortel is under bankruptcy protection but before the open on Friday, they announced a profit of $488 million for 2009. Although this was due to the liquidation of most of the company’s assets, the news still managed to boost the stock. We saw a major jump Monday morning.
NRTLQ opened at $0.063 and hit a low of $0.062 before rallying to a high of $0.12. The stock settled modestly lower at $0.085. What interests me about this move is the fact that volume increased dramatically. The daily average is usually about 1 million shares but on Monday more than 72 million shares were traded. I want to see if this stock can maintain its new price level or will fall back down to trade in its current range of between $0.03 and $0.039.
This is a good example of a breakout after a nice long consolidation.
The next stock I wanted to add to our watch list is CTDBQ. On March 9 the stock made very strong gains opening at $0.025 and closing at $0.055. CTDBQ has managed to hold on to most of those gains despite a sell-off on Monday. The stock opened at $0.06 and rallied to a high of $0.061. Investors managed to push it to a low of $0.035 and it closed slightly higher at $0.036. I want to wait and see if the selling pressure is over. I would like to see a brief period of consolidation in this stock but I think the strong volume could signal a rise in the stock’s price.
Have a Great Trading Day,
Francis
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