Chart Outlooks: NLST, AON, APPA

Things aren't as rough as they were yesterday, but we're still in the red for the day as investors sort through a wave of mixed economic data. There are good trading opportunities all the same (up and down), like Netlist, Inc. (NASDAQ:NLST), A.P. Pharma, Inc. (NASDAQ:APPA), and Aon Corporation (NYSE:AON). Here's a closer look at each.

It's amazing what you can notice when you take a step back and turn a daily chart into a weekly chart. Take A.P. Pharma, Inc. (NASDAQ:APPA) for instance. What appeared to be a stock looking to use support at $1.28 as a launch pad may actually be a stock simply caught in a range.

Though the last three days have been impressive, a weekly chart reveals that the rally stopped for good reason - APPA ran into a resistance line that was a problem back in mid 2008.  You could make the case that A.P. Pharma, Inc. has already taken care of that problem, with the peak at $1.85 in mid January. Well guess what... that was a 2008 resistance level as well.

Ultimately, I do think A.P. Pharma will get over both hurdles and move onto higher levels. However, we canals see APPA has a history of building bases for months on end before making that move (and keeping the gains). I suspect the stock will move sideways at the $1.28 support line before making the next bullish leg.

Aon Corporation (NYSE:AON) is getting tons of attention today. Not that it's not deserved, but I hope it doesn't detract anyone from the important shape the chart has been taking over the last few months. A big move is likely brewing up for AON.

The chart shape is a symmetrical wedge, and it's closing in on AON fast. It will come to a complete point in April, but I suspect it will force the stock out well before then... perhaps within a few days. Generally speaking, once Aon Corporation moves above either the support or resistance line, the move should be big and quick. (I contend it will be a bullish move, but I'm not betting any money yet.)

In the meantime, with Aon Corporation having pushed off the lower support line and running all the way up to within one point of the resistance side of the wedge, I don't see much point in risking a trade now. Buy at support, sell at resistance, or buy a breakout..... we're not seeing any of those scenarios from AON right now. Patience.



Things just went from bad to worse with Netlist, Inc. (NASDAQ:NLST). I pointed out that the breakdown was materializing back on January 21st, when NLST fell under support $4.80, and was knocking on the door of support at $4.30. You can thank me later.

See, in the meantime, NLST has made good on that forecast, sinking all the way to a low of $3.26 today. The selling volume has been a little lighter than I'd like to see as a bear, but the depth of the loss since then more than make up for it - very few investors are going to look at the current Netlist, Inc. chart and decide to jump on a sinking ship.

The nail in the coffin came today, when Netlist, Inc. shares fell under another important support level... the Fibonacci retracement line at $3.42. It looked for a while (earlier in the week) like the bulls might make a stand there. It wasn't to be though; NLST broke that floor, and may well be en route to my original target of $2.00....ish.