The market ended the day considerably higher, though overbought pressures still abound. As such, being picky about stock trades is still advised. Among the best we've seen today are Zhone Technologies, Inc. (NASDAQ:ZHNE), Openwave Systems Inc. (NASDAQ:OPWV), Cardium Therapeutics Inc. (AMEX:CXM), and Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX). Let's review each one in detail.
We've been following the bearish saga of
Cardium Therapeutics Inc. (AMEX:CXM) for a while now. Our first mention back on
October 9th was a tad early, but we made up for the early entry by
October 14th when we reiterated the downside view. Today, the pullback has been clinched.
The last bastion of hope for Cardium Therapeutics was the flimsy support line at $1.10. Shares bottomed and reversed there in April, and the current downtrend staled around there last week. Today's low of $1.04 from CXM, however, has cracked any remaining floor.
From here, Cardium Therapeutics could make its way back to as low as the $0.40 area, where it bottomed late last year.
Mea culpa on
Zhone Technologies, Inc. (NASDAQ:ZHNE) ... we posted a bearish view on the stock after we saw a nasty pullback in September, but the sellers were halted at $0.48 and the stock appears to be headed higher now.
It wasn't clear until today if Zhone Technologies was actually going to make good on the potential recovery. But, with a bullish MACD cross on the daily as well as the weekly charts, it's difficult to say the stock's not moving upward. Moreover, the bullish volume for ZHNE has been growing consistently over the last two weeks.
ZHNE, realistically, has the potential to make its way back the $1.18 area before hitting a significant resistance line.
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Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) at its current price. The big pullback that spanned most of September appears to have been halted and reversed at a major support line.
There are actually two support lines for some Lexicon Pharmaceuticals - one that goes back to March, and another that just traces all the lows back to July. It's the latter that was brushed last week. Based on the strong move higher we've seen from LXRX over the last four days though - on growing volume - odds are good that support line will be enough of a springboard to foster a trade-worthy bounce.
As for a target level, we're not expecting Lexicon Pharmaceuticals to bounce any higher than the $2.50-ish area in the near-term. That's not only where it peaked in September, but it was also a problem area for LXRX last year.
And finally,
Openwave Systems Inc. (NASDAQ:OPWV) is a bearish/short trade in the making. Actually, it's already been made if you're bold. If you prefer to wait form confirmation before taking a swing (and don't mind giving up some gain up front), then it's almost a bearish trading idea.
You can't see it very well on the daily chart, but on a weekly chart of Openwave Systems, the momentum has clearly shifted to the downside. On the same weekly chart we see bearish MACD cross, and we can also see that those bearish MACD crosses have accurately signaled trade-worthy pullbacks from OPWV.
What you can see from the daily chart is a strong of lower highs from Openwave Systems shares, and a high-volume selloff today that may just be an omen of things to come. If you really want to play it safe though, wait for OPWV to break under support around $2.40 - there's plenty of room for the stock to tumble (it was at $0.50 near the end of last year).
If you'd like to know of any changes in our opinion of ZHNE, CXM, OPWV, or LXRX (or if we officially recommend them as trades), be sure to sign up for our free newsletter today. It's delivered weekly.
