Pre-Market Analysis for Friday, July 23
Today in the Stock Market
The Dow Jones Industrial Average came back with a vengeance on Thursday. Not only was it able to recover all the ground lost in Wednesday’s sell-off but it was able to gain more points. The only downside we see to the 199 point rally is that it was made on relatively low volume. This is an indication that investors are still apprehensive about any economic recovery. In the short-term, we think 10,400 will continue to cap any major advances and we could see some modest selling at today’s open. If the index does break above 10,400, investors will hit even stronger resistance at 10,600.
The tech sector was also able to reclaim lost territory. QQQQ, the ETF of the NASDAQ Composite, gapped significantly higher Thursday morning but even with the strong momentum, it was unable to break resistance at $46.00. Unless investor confidence receives a major boost in the next few days, we think this price will continue to act as a ceiling in the near-term.
Gold prices continue to carve out a fairly wide channel, which is not surprising. Investors are waiting to see a clear direction for the global economy before they jump back into gold. However in the long-term, precious metals still seem like a very safe play. Investors will continue to support gold as a hedge against inflation or as a safe haven investment. We are expecting GLD to swing in a fairly wide range with support at $115 – and as we can see from the price action on Thursday, $117 is providing strong resistance.
USO is fairing modestly better as it broke through short-term resistance at $35.00. The ETF managed to rally to a high of $35.56 and ended the day only a few cents lower. There is very strong resistance at $36.00 so we could see USO struggle to move higher in the next few days.
It has been another profitable week for us. Although the recent gains in the market look a little shaky, we have been able to take advantage of some decent bounce plays.
We first want to touch in with GRNO. We picked this stock up at $0.60 on Monday and managed to take some profits at $0.71 as we saw some strong selling pressure. However the drop below $0.57 on Thursday triggered our stop-loss so we are out of the trade. Still, we managed to make gains of 18% on this trade, so it was not all bad.
LEHMQ was the exciting trade on Thursday. Wednesday’s price action triggered our trade at $0.07 and there was some follow through buying on Thursday. We took some profits at its intra-day high at $0.078 but we think LEHMQ has potential to break resistance at $0.08 in the short-term.
ABK is also providing us with profits. We picked up this stock when it was holding strong support at $0.65 and on Thursday the stock rallied to a high of $0.78. That is a gain of 13% and we think it is only the beginning. ABK is generating some good volume and we think this momentum will lead to another strong push today.
IMGG gapped higher Thursday morning and although it was unable to break above Wednesday’s high, we did have a chance to take more profits at $0.31. The fact that IMGG closed at its high is an indication that we should see at least one more push up.
Another profitable play for us is SILA. We picked this stock up on Wednesday when it was trading at its low of $0.75. On Thursday, the price hit a high of $1.00 which was a gain of 33%. Not bad for holding a stock just one day! Volume is starting to weaken but the fact that SILA was able to close near its session high should provide some momentum at the open.
PCBC is showing some very positive price action and if momentum continues to build, we should see a break of $0.75 very soon. Volume will be the important factor to watch in this trade. The stock will have to generate a lot of activity to have a confirmed break above $0.75. If the price does move above this area, the next major resistance point is $1.00.
Earlier this week we mentioned that we were watching SFMI. This is another stock that has made some very decent gains recently and because of the economic turmoil, appears to be oversold. We’ve been watching to see if $0.125 would hold as a support point and we received our buy signal Thursday at the open. The stock opened at $0.1320 and the strong momentum helped push it to a high of $0.1679. That is a gain of 27% in one session. If volume continues to grow, the price should easily break resistance at $0.175.
We remain active in ESLR after making some recent profits. We pointed out earlier in the week that the price continues to hold support at $0.65, which was our original entry point. On Thursday, the stock hit a high of $0.709. It held on to most of its gains and closed in positive territory, which is an indication that this stock should reach its recent high of $0.75.
EVSO provided us with some quick gains on Thursday. We said that it was due for a bounce and we were not wrong. We received our buy signal at the open on Thursday at $0.065 and rode it to its high of $0.0823. That is a gain of almost 27% in just a few hours. Volume remains strong on this stock so we could see more follow through buying this morning but there is strong resistance around $0.08.
LBSR is poised to resume its uptrend after a two-week consolidation period. On Wednesday, the stock rallied from a low of $0.013 and closed in positive territory at $0.0185. There was some follow through buying on Thursday as the stock opened at its previous close and then rallied to a high of $0.0225. There could be some minor resistance at $0.025 but if volume remains strong we could see significant gains in the medium-term.
Timing is everything when it comes to finding the best plays and that lesson was presented to us in AEHI. We said we were going to remove this stock from our watch-list Thursday morning but the price action was just too strong to ignore. The stock traded over 2 million shares and closed at $0.51, which is three cents above its resistance point. This is the movement we were expecting to see earlier in the week. As we pointed out, we were waiting for the stock to break $0.50 on strong volume. With this kind of activity, expect more momentum at the open.
Have a Great Trading Day!
Your Hyper Growth Stock Team
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