Today's Breakouts & Breakdowns (9-5-08)
By John C. Lee | September 06, 2008 | 9:42 PM | 0 Comments
SanDisk Corp. (NSDQ: SNDK) broke out today, up 31%, on news that Samsung may buyout or form a joint venture with SNDK in the future. Nothing concrete was reported, but only an interest. SNDK formed a funky-looking island reversal which may potentially be a double-bottom. Nonetheless, it is a breakaway gap and the stock should drift higher as the stock has entirely broke above the 50-day MA.
Downey Financial (NYSE: DSL) is up 33% and it has to be due to massive short-covering. As of the end of July, 56% of the float is short. DSL also broke free from the 50-day MA. If DSL consolidates in a tight range and forms a high-and-tight flag, this one is a buy. Otherwise, I wouldn’t touch it.
Ulta Salon (NSDQ: ULTA) jumped 14% today due to positive earnings reported yesterday after-hours. ULTA earned $0.06 per share vs. a loss of $0.23 per share a year ago. Analysts expected $0.05 per share, beating by a penny. After forming a double-bottom and consolidating for 3-weeks, ULTA finally broke out of its neutral range. The next area of resistance is at the 200-day MA and the next level of support is at $12.
Pike Electric (NYSE: PEC) got crushed, dropping 15.7% after management guided estimates lower for the fiscal 2009 year. Previous estimates were at $0.55 - $0.65 per share. Analysts expected $0.75 per share. This is a dead cat bounce/pullback play for shorts. Support is found at the 200-day MA.
ABM Industries (NYSE: ABM) also popped lower, down 18.5% due to lower guidance. Management expects earnings of $1.10 - $1.15 per share for the fiscal 2008 year vs. a previous guidance of $1.20 - $1.35 per share. Support is found at the 200-day MA. Expect some neutral range-bound trading between the 50-day MA and the 200-day MA. This is also a play for shorts, and long positions should be avoided.
Oil States International (NYSE: OIS) is getting popped like the rest of the energy, materials, and industrial sectors. OIL dropped 7%. OIS broke its trendline at $45 as well as the 200-day MA. Traders could get away with chasing this stock, but I would wait for a pullback.
Genco Shipping (NYSE: GNK) got downgraded by Lazard Capital Markets to a “Hold” from “Buy” and the stock dropped 6%. GNK broke strong support at $50 and is likely to head lower. Notice the churning going on at the 50-day and 200-day MA’s since June. After numerous rally attempts, GNK just wasn’t able to make a new high.
Nokia (NYSE: NOK), which was also the first stock I traded back in 2003, warned that market share will fall in Q3 and the stock fell 7.6%. That’s no surprise since competitors like Apple, Samsung, and Motorola are just killing it. NOK looks like it may have hit short-term capitulation, signaled by the hollow red body representing a bullish gap down in this case. NOK is still in a confirmed downtrend. Traders and investors should be aware that this may be a short-term reversal.
Exelon (NYSE: EXC) like other utility stocks, such as NI and PEG, dropped today (EXC dropping 8%) The diversified utilities sector is not immune to the industrial, material, and energy industry sell-off.. EXC is a pattern that I like to call a “waterfall”, reaching vertical free-fall. Traders can expect a bounce, but EXC is toast and is in a confirmed downtrend. The stock broke numerous support levels, reaching a level it has not touched since August 2007.
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