Aug 27, 2010 10:04 AM PDT
It's no big surprise that Xinyuan Real Estate Company Ltd. (XIN) shares hit a low of $3.77 this week, nor was it a surprise that they hit a high of $5.33. If you look closely, you'll see those two levels were approximately the key Fibonacci retracement lines of the rally from October through May. Moreover, XIN is apt to continue bounding around between those important support and resistance levels.
Though it may be tempting to 'trade the range' while Xinyuan Real Estate Company shares bounce around in that horizontal zone, note that at less than $5.00 per share, those swings are hard to trade and create any meaningful profit.
It may be wiser to just wait on XIN to break either of those retracement lines, and then trade in that direction. As it stands right now, we think the ceiling around $5.34 is likely to be the one this cracks first, meaning Xinyuan Real Estate should be on your bullish watchlist. It could be good for a move up to at least $7.70.
It looks like the weight of all its recent gains has finally caught up with Spectrum Pharmaceuticals, Inc. (SPPI). The stock's really struggling today, but more importantly, is hinting that the balance of power may have just shifted from the buyers to the sellers.
The pattern is called an 'outside day' reversal; though it's not a perfect one, it's close.
An outside day/bar just means that the open and close today are going to be above and below yesterday's and entire bar. The fact that today's high and today's low for SPPI are so well past yesterday's high and low augments the strength of the reversal for Spectrum Pharmaceuticals. This outside day is not perfect, because SPPI opened just a hair under yesterday's high, and the stock hasn't closed yet. You get the idea though.... the shape of the last two bars indicates a harsh change of opinion from the market. The volume spike augments the reversal.
We're not setting a target for a downside move from Spectrum Pharmaceuticals. It may be best to just watch for a similar upside reversal and then cover a short/bearish trade then.
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We hate to break it to any VeriFone Holdings, Inc. (PAY) fans or owners out there, but this chart just flashed a major downside reversal signal. In fact, the chart's got a variety of things working against the share price now.The biggest drawback here is the gap PAY made between Tuesday and Wednesday the market may want to see VeriFone share go back and fill the gap in before proceeding higher. The problem is, the damage that will need to be inflicted to make that happen may also jump-start a downtrend that can't be staved off.
The other big tip-off that a top has been made was the way VeriFone shares surged on Wednesday on huge volume, and immediately (the next day) we saw a low-volume doji bar. Where did all the PAY buyers go? That clue is being confirmed today with a very decisive bearish bar that may be telling is the profit-taking has started.
If you like consistent trends and bullish trading ranges, you're going to love Netezza Corporation (NZ). The stock's been in a rising 'zone' since February, making higher lows and higher highs with every ebb and flow since then.
As cliche as "the trend is your friend" sounds, it's still applicable in the case of Netezza Corporation; we expect more upside primarily because the stock's gathering momentum. Moreover, NZ is gathering more buyers (measured by rising volume) on the way up.
That said, we're now at a key checkpoint in the uptrend. The 61.8% retracement level of last year's big tumble lies at $10.50 or so, versus the stock's current price of $9.95. Normally we wouldn't worry about it when the stock was rallying as well as NZ has been, but the fact that the other major Fibonacci line (at the 38.2% retracement) level gave Netezza Corporation shares some trouble in April tells us not to take them lightly.
If NZ hurdles this next potential ceiling, then the risk/reward ratio gets very favorable... not that it will stop many traders from getting on board now.
There are two things going on with Anadys Pharmaceuticals Inc. (ANDS) suggesting there's upside ahead.
The first argument in favor of the stock is simple... bullish momentum. After making a ridiculous gap in early August, Anadys Pharmaceuticals shares retreated - modestly - all the way to a low of $2.21 before making an equally-gentle reversal to higher prices. And, that's the key here - a U-shaped rolling reversal rather than a V-shaped reversal (since V-shaped reversals are more likely to fail).
The other thing these shares have going in their favor is the floor that's been established around $1.50. This recent bounce came after it was touched again, but if Anadys responds to this push off of that floor like it responded to the last one, ANDS could be a monster winner.
If you'd like to know when or if we issue trading alerts specifically for ANDS, XIN, PAY, SPPI, and NZ, then be sure to subscribe to our free e-newsletter. It's delivered two to three times per week.
