Technical Outlook: CAB, OCLS, GMO, ZHNE

Though the overall market may be a little but wishy-washy as we head into the middle part of September (historically, the worst month for stocks), a few charts have suggested the next several days could dole out big gains. Granted, some of them are bearish, but they're big all the same. General Moly, Inc. (GMO), Cabela's Inc. (CAB), Zhone Technologies Inc. (ZHNE), and Oculus Innovative Sciences, Inc. (OCLS) should be of particular interest for those looking for near-term trades. Here's a detailed look.

Don't be distracted or confused by all the red you may be seeing on a chart of Oculus Innovative Sciences, Inc. (OCLS). Despite the (mostly) lower closes after higher opens - usually a bearish sign - this stock is indeed rising. The buy signal (not shown) is a MACD indication.

Though we didn't do it this time with our chart, we suggest you zoom out to a weekly chart and take a look at the bigger-picture trend. If you do, you'll clearly see that Oculus Innovative Sciences reversed a nasty downtrend from Q2, and are now in recovery mode.

Our bullish confidence doesn't stem from the intra-day 'high-to-low' action from OCLS.... that's actually concerning. No, our confidence is based on the handful of accumulation days we've seen from Oculus since hitting bottom in early August. They're getting more frequent, and larger.

Let's start with a conservative target of $5.15 for now.

Slow and steady wins the race - a lesson Zhone Technologies Inc. (ZHNE) investors are going to learn the hard way. Had the stock just simply continued to follow its rising support lines higher, there'd be no reason to discuss it today. When shares got way ahead of themselves in late August though, an implosion was almost inevitable.

In short, Zhone Technologies is likely headed back to at least $0.40, and more likely, to $0.26 or so. That's quite a retreat from the peak of $0.93 on the 27th.

There's a slight chance the support line that had been in play for the better part of Q2 might catch this tumble before it gets really ugly, but it's not like it's the strongest of support levels... it buckled for a while in July. The more likely landing point for Zhone shares is the combination of horizontal support at $0.26 (lows hit and May and July) and a longer-term rising support line. By the time ZHNE can get to that level though, the support line could be slightly higher. Let's just play it by ear once there.


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The reason for the downside potential from Cabela's Inc. (CAB) is pretty straight-forward - the support level near $14.78 (which was flimsy to begin with) was broken today with the stock's move to $14.50. Now that the damage is done, a return trip to $11.37 is a distinct possibility.

The likelihood of that pullback is augmented for CAB by a double-top at the $16.76 level.

It's worth noting that Cabela's Inc. shares found support - for a while - at $14.78, but that level was also resistance in April, and briefly in late July. When prior resistance lines become support lines (and vice versa), they tend to mean more. And, when they break down as they have for CAB, that means more as well.

If $11.37 breaks down as support, Cabela's could be in some serious trouble.

And finally, General Moly, Inc. (GMO) may be in the midst of a breakout effort as you read this. The ceiling at $3.15 (and at $3.00, to a lesser degree) has been smashed after fours months' worth of trying.

Truth be told, GMO is still nothing to bet on blindly. Though resistance is crumbling, it could take two or three ebbs and flows to decisively get General Moly over the proverbial hump. In fact, it would be surprising if this stock didn't remain volatile... even after today's progress That's the long way of saying traders will still find dips to buy on, and will want to avoid stepping in at short-term peaks, even though the longer-term breakout move took a major step today.

As for a target, General Moly shares shouldn't hit any real turbulence until $6.00, so let's shoot for that mark until further notice. (That said, GMO also has a big Fibonacci line to cross at $5.28. We didn't show it because the chart was too crowded as it is. It's there though.)

If you'd like to know when or if we issue trading alerts specifically for OCLS, GMO, CAB, and ZHNE, then be sure to subscribe to our free e-newsletter. It's delivered two to three times per week.