What's heating up or cooling off in the stock market? Plenty, but Silicon Image Inc. (SIMG), RealNetworks Inc. (RNWK), CombinatoRx, Incorporated (CRXX), and SciClone Pharmaceuticals, Inc. (SCLN) are of particular interest for one common reason... each is getting real close to being trade-worthy (if they' aren't already). Here's what you need to know.
Just so you know,
we actually picked RealNetworks Inc. (
RNWK) several weeks ago when
it was trading at $2.78. So, the current price of $3.90 is more than satisfying, though it's been a roller coaster ride between then and now. In any case...
Today is the third instance of that resistance line being jumped, meaning perhaps we shouldn't worry about it much anymore. That's not to say that we expect RNWK to keep rallying - the one thing we've learned from RealNetworks is that it's not good at immediate follow-through. We're just starting to accept the fact that volatile swings are the norm.
More importantly, we interpret this as a sign that RNWK is indeed shrugging off the drag it felt during the bear market; each move to news highs - even if temporary - makes bullishness easier to muster the next time.
If you're sweating today's big pullback from
CombinatoRx, Incorporated (
CRXX), don't get too tense yet. There's still a remaining support line that could possibly come into play today. IN fact, it IS coming into play today.
Actually, there are two support lines in effect here - one steeper than the other, though both trace the string of higher lows we've seen from CombinatoRx over the last two months. As long as either or both hold, this dip will be no worse than the one from early September.
If you want something to worry about, however, worry about how volume with this round of selling for CRXX around has been considerably stronger than the last. If support does break down, look out below, because the CombinatoRx sellers have itchy trigger fingers.
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SciClone Pharmaceuticals, Inc. (
SCLN), which had been riding a rising support line since June, found a falling resistance line early in the month... and has been sent lower ever since. In fact, the new downtrend from SCLN was the reason the old uptrend was snapped.
This is what's known as 'low hanging fruit'. SciClone Pharmaceuticals walked up to a peak of just under $6.00 from a price of under $2.00...a quiet 200% gain that was doled out with no fanfare whatsoever. The pullback - though likely to be just as quiet, could be just as big.
Needless to say, the key to further downside from SciClone is that falling resistance line. As long as it's not broken, look for more of the same. That level would be a good stop-loss level as well. As for a downside target for SCLN, a retreat back to $2.00 would be a stretch, but not impossible.
Finally, though it doesn't look particularly troubling yet,
Silicon Image Inc. (
SIMG) may have more downside in store than you can see on the surface.
The heart of the problem is the potential double-top around $3.45. However, the failure of one of the two key support levels for Silicon Image shares adds to the bearish omen. It's the near-term one that broke, and it only broke today. It's not a major deal yet. However, if SIMG tumblers under the loner-term support line, then things could get nasty in a hurry.
If it happens, Silicon Image could make its way back to the $2.14 area, though it's important not to jump the gun. Wait for SIMG to break all the key support levels before taking that dive.
If you'd like to know of any changes in our opinion of RNWK, SIMG, SCLN, and CRXX (or if we officially recommend them as trades),
be sure to sign up for our free newsletter today. It's delivered 2 to 3 times per week.
