Watchlist: FNSR

Looks like FNSR is ready to break down and possibly fill the gap as mentioned in the chart below. The 50 DMA was met with resistance and pulled back. I indicated this in my earlier article. In order to fill the gap, it has to pull back all the way to $3.00.

Watch out for the earning release on June 7th.

Jury finds Enron CEOs Lay, Skilling guilty

A jury of eight women and four men found the Enron founder and former Chief Executive Kenneth Lay guilty on all six counts of fraud and conspiracy.

Lay was convicted on all six counts, while Skilling was found guilty on 18 fraud-related charges, but not guilty on nine insider-trading charges. They are awaiting sentencing.

The details about the charges and verdict are listed here. Details are also available here.

Watchlist: RBAK

A broadening top bearish chart pattern has been formed in RBAK. This pattern also known as 'megaphone' top needs to have atleast 3 higher highs and 2 lower lows before breaking down. A break below the lower trend line will confirm a break. The stochastics is also pointing downwards.

Stock Market: When will the selling stop?

The stock markets have been in oversold teritory for a while and many are waiting for a bounce. Most of the retail investors would have spent the weekend thinking about Monday's market. Will it open well and stay green all day? Here comes Monday and looking at the market open, many would have been disappointed. The market continues its slide.

There are few stocks that did well inspite of the slide. Some stayed positive while some stayed at key support levels while some gave up.

AAPL & GOOG are holding the 200 DMA as support.
BRCM closed below the 200 DMA on higher volume.
MRVL gave up most of its gain from Friday and closed below 50 and 200 DMA.
QCOM is holding 200 DMA as support.
RBAK continued its upword movement inspite of the market slide.
ICE closed below its 50 DMA on higher than normal volume.
AKAM closed below the 50 DMA on high volume.
AMD gapped up on Friday after Dell's announcement to use AMD's chips.
YHOO rose 2.6 percent to $30.25 on the Nasdaq after a Barron's newspaper report said the stock was poised for a rebound.

Stocks to watch this week - May 22

BRCM: Check out my reasoning. Short term target: $39-$40
QCOM: Check out my reasoning. Short term target: $49.5
MRVL: Bounced on friday after earnings report and good guidance.

QCOM: Oversold Bounce

QCOM has pulled back 11+ % from its highs of $53. The 200 DMA is proving to be a stong support area. The chart below is a 10 day chart.

It appears that it has broken the near term downtrend. (We do not know if we have broken the long term downtred yet.). Today's volume was better than any of last week's down day volume. Its near term resistance is around 49.5. This looks to be the case considering the 6 months chart as well.

Qualcomm was down coz of knee jerk reaction to ITC remark that it had infringed on Broadcom's patent.

AAPL revisits 200 DMA

Apple Computer Inc (AAPL) closed today at $63.18 which coincides with the 200 DMA. Although AAPL has lost a few points along with the overall market, its long term trend remains intact. Since NASDAQ is at oversold condition, there is good chance for AAPL to recover. Watch for resistance at $65-$66 area. A bounce with lacklusture volume is no good. Any move AAPL makes from here will have to be supported by VOLUME.


During After hours, DELL, MRVL and AMD were trading significantly higher which bodes well for the tech sector. Read my earlier entry on MRVL and AMD.

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MRVL & AMD

Marvell Technology Group Ltd (MRVL) reported their earnings today. Its sales surged and guided higher than analysts' expectation.

In my earlier article on MRVL, I had mentioned that it has formed a bearish head and shoulder pattern. It will be interesting to observe how it plays out in the days to come. Remember, I had also mentioned that it can revisit the 53-54 area before trending downwards.

Advanced Micro Devices (AMD) jumped 14% on the decision by Dell to use AMD's Opteron Dual Core chips in servers. Dell Inc after reporting their earnings is also trading up by 3.5%

Good news for AMD is bad news for Intel Corp. INTC is trading lower by almost 5%.

Nasdaq's reaction:
Going by the after hours trend, I am positve that Nasdaq will break its losing streak tomorrow.

GOOG's dilemma

GOOG is placed in a tight situation. The charts might give you a better picture.

It is sitting right at the 200 DMA which also coincides with the long term trend line (drawn since its IPO). 200 DMA is now at $370.

If this is a support line, it also has a resistance at the 50 DMA and the short term negative trend line shown in the below chart.

It will be interesting to observe which way GOOG decides to move. At this moment, the stochastics is pointing upwards and the stock may possibly test the 50 DMA for resistance and move down.

Whatever direction it takes, the volume and price action will be huge.

OVTI breaks uptrend

OVTI breaks its 7 month uptrend. Today, it broke below its 50 DMA. Also read my article where I had cautioned on OVTI when the price was 32+ on May3, 2006. I am unable to create a link to it..but you may find it in the May Archives section.

Gold Rush

Its no secret that GOLD prices has been rising for sometime now. Many articles have been written about the rise of Gold. I am here to add my own thought about it with data gathered from various sources.

Lets talk basics of economics to begin with.

Supply and Demand.
From what I have gathered, the supply of gold has almost remained stagnant or make a minor rise compared to the demand. In other words, the demand is more than the supply. There are various reasons for poor supply. There are not many countries involved in new discoveries. Reasons being that the process is very difficult and time consuming. But on the other hand, emerging economies like India and China are consuming increasing quantities of Gold. Its a known fact that economies in Asia are booming. The disposable income / savings are up. What do you think the population will do with their disposable income. Invest in something stable..like Gold.

I think this is a good segway to discuss regarding India and its passion for Gold.

I do not know of any Indian, except the very poor, who do not have some gold. Its almost a must have. There are a number of occasion when Indians buy gold. Celebrating birth of a child, Ear piercing cermony, a girl attaining puberty and marriage to name a few.

Akshaya Thrithiyai is an occasion which is considered auspicious for starting new venturs and making new purchases. People generaly buy either Gold, Silver or new clothes. Jewelers take this opportunity to induce customers to buy ornaments by coming up with attractive offers. This year, the occasion was observed sometime in April.

Generally speaking, one cannot imagine an indian marriage without gold. Therefore, the buying will happen despite the high prices and it is only a matter of time before the market hits further highs.

Why do Indians buy gold?
Gold is still a sign of credibility. It offers security foremost, then liquidity and income.

Is Asia the only reason for the Gold rush?
Nope..! The declining gold production compared to the demand, a weak US $ due to extreme debt levels and deficit spending, foreigners withdrawing their US investments, a weak US economy and negative real interest rates are some of the other drivers propelling the gold price upwards.

MRVL breaks down

MRVL just broke down after forming a bearish head and shoulder chart pattern. It is below the 200 DMA as well. This will be a very good opportunity to go short on the stock. It might get a bounce to revisit the 200 DMA or the resistance point at around 53-54 before further going down.

Watchlist: BRCM

BRCM has been hovering around the 200 DMA for 3 days now. Charts indicate that it is in the oversold territory. It may be a good time to initiate long positions.

Stocks to watch: FNSR

Today, FNSR's low was 4.28 which coincides with the low of Apr 11/12 and Mar 10. Today's action has happened after the stock testing new highs a few days back. Subequently, it has violated the 50 DMA and is holding the 4.27 area as support. The stochastics indicate that it may recover.



However, I would watch its reaction to its next meet with the 50DMA. There is a good chance that it may meet with resistance and eventually lead to a break below 4.27.

Global correction

A correction is being expected on certain emerging markets that has been going strong for the past 2-3 years. I guess - its correction time.

Asia - India in particular, South America - Brazil and Mexico in particular and Europe. Ever since the US rate hike by the FOMC, Foreign Institutional investors (FIIs) have been withdrawing from the hot markets.

Precious metals - Gold, Silver and Copper amongst others declined between 1% and 3%. Gold closed below $700.

Watchlist: RBAK

RBAK has formed a bearish 'Head and Shoulder' chart pattern.



This indicates that there is a potential for a fall in the stock price. Notice that the stock observed its 50 DMA as support during the start of this week but is revisiting it...This is not a good sign. A bearish engulfing pattern is also seen considering that RBAK lost all of its gains made on May 10, the following day, on higher volume.

A close below the 50 DMA on higher than usual volume will confirm a downtrend. Support can be expected around $17.50.

Today, RBAK closed at 21.28.

Analysis on Ariad's lawsuit on Lilly

I found this interesting blog article in Lawrence B. Ebert blog. I thought it would make an interesting read.

http://ipbiz.blogspot.com/2006/05/divergences-between-ariadlilly-and.html

BRCM: Next support at 33

Broadcom Ince (BRCM) closed the gap that was formed in late Jan and extended its loss today. One may attribute today's loss to broad sell off in the market. It has been weak since March and today's weak market only helped its downtrend. Notice that the volume was also above average.

Technically, I feel 33-32 will be a good support.

Heavy tech sell-off: What to expect?

It was a bad day for the tech heavy weights. AAPL, BRCM, QCOM, MRVL, YHOO, GOOG...the list goes on. All down 3% or more.

Lets take a look at how Nasdaq is positioned.

Looking at 6 months chart of Nasdaq, it was range bound for almost 2 months before it broke out in the last week of March. Notice that it observed the 2310 area as its support twice before today's action. It remains to be seen if it can hold the 2245 area as support.

Broadening the charts to cover the action since 2004, here is what it looks like. One has to wait and watch if nasdaq can hold the trend line as support.

Where is AAPL headed?

I have been watching AAPL for a while and realized that it is facing tremendous resistance at 72-73 area. In my earlier blog about AAPL, I had mentioned that it has formed the reverse head and shoulder pattern and is ready to make the move upwards breaking the resistance at 72.




Here comes Mr.Fed and raises the rates and leaves the door open for further raise. The markets obviously did not like it and subsequently the stock market suffered. AAPL was no exception. Notice the volume was high compared to the earlier week but not as good as the 3 up days that we experienced earlier.

That said, it would be interesting to watch how AAPL behaves tomorrow. Also read my blog about nasdaq's behavior.

CMED consolidating

Its only a matter of time before CMED starts moving up. In yesterday's blog on CMED, I had mentioned that it has cleared the downtrend.

28 is a hard resistance to overcome. This is the second time it is experiencing resistance at this area. The earlier occasion was Apr 24 when CMED rose 16%.


As long as the uptrend marked in the chart is not violated there is no reason to sell positions.

GOOG's Handle

Last week was a painful week....in terms of stock going nowhere. Looks like there is some action now.

Analyzing it, I realized that it has just broken the downtrend that started after the earnings report came out. Notice in the chart below that the earlier resistance of 390 is now acting as the support.

The relative strength is trending higher. The chart also looks like a possible handle in the making.

Tomorrow will be interesting to watch..... In general, the market reaction to the Fed's rate hike and w.r.t. GOOG, a follow through day.

Google is also hosting a meeting with analysts and members of the media on Tuesday during market hours. Chief Executive Eric Schmidt and other Google executives are expected to provide presentations. The meeting is one day ahead of the Internet search giant's annual shareholder meeting.

CMED looking better

CMED rose 8.46% today on an upgrade from UBS. UBS upgraded it from 'Reduce' to 'Neutral'. Technically, CMED is starting to look better. A close above 50 DMA on strong volume will go a long way in emphasizing the reversal.



The trend line (Short term and Long term) drawn shows that the downtrend has been broken.

A closer look at the relative strength (RSI) indicate that it is improving.

Lately, the big volume days has been positive days. The low volume pull back after the earlier jump has been controled which bodes well for the stock.

More upside for FNSR

Yesterday's action was convincing. The stock went beyond the earlier resistance of 5.13 on double the average volume. The trendline marked in the figure will give you better picture. Everytime it has come in contact with the trend line, it has bounced up in higher than normal volume.



FNSR is placed well with a MACD crossover.

The Technicals shows it is still a good time to buy as ROC remains low while the stock is rising.

Broadening the view, here is the 3 yr chart. FNSR gapped up with huge volume...sure sign of big money flowing in. Following the break out, it was able to hold the 4.27 area as support. Classic case of earlier resistance turning out to be a support on improved technicals.



Bottom line: FNSR is well positioned to rise. Look forward to more upside from here.

ARIA jumps: wins patent suit against Eli Lilly

Ariad pharmaceuticals along with research institues (Harvard, MIT and Whitehead Institute for Biomedical Research) won a patent infringement suit against Eli-Lilly.

What does this mean to investors?
The jury awarded damages of $65.2 million, based on 2.3% royalty rate on U.S sales of two drugs, Evista and Xigris for the duration since the lawsuit was filed until feb of this year. The most interesting aspect of the ruling is this. The jury has also awarded the payment of continuing royalties through 2019, when patent expires.

You may be thinking that the damages are awarded to a group...not just Ariad. Yes, thats true but the CEO of Ariad mentioned that the company would receive at least 75% of those royalties.
Lilly plans to appeal but it is possible that the two companies could reach a settlement before the appeals process is kicked off.

How will the stock behave in the days to come?
Looking at the charts, I realize that this is one of the 3 biggest volume days in the past decade and the price is up 26%. I am sure this is the start of greater gains to come. I will revisit this whenever something interesting happens to ARIA.

I am expecting a short squeeze for 2 more days..but I will have to wait and watch.

Caution on OVTI

Omnivision Technologies (OVTI) is having a dream run that every investor would love to be a part of. 175% gain from its lows in October 2005. Isnt that something..!

I think the party is coming to an end. Wise investors have a good opportunity to take take the money and run. Here are the reasons.

OVTI is closing in on a major resistance at around 33.00 - 33.30. Take a look at the chart below and you will understand the reason.

Here is my substantiation.

1. The investors who bought the stock during the last months of 2004 are ready to take their money off to break even.

2. I am not sure if this has more energy to run from here

3. The investors are looking to book their profits and

4. The shorts are ready to flood the market with their sell orders.

In my opinion, all the above factors should drag the stock down.

Here is some additional technical analysis if the above not good enough.

If you take a closer look at the charts and the RSI, one can notice that the RSI is declining while the stock is going higher. This deviation is a bearish sign.

AAPL going north

I have been positive about AAPL's prospect in my earlier blog. I revisited it when there was yet another buying opportunity on a pull back. I am here to reiterate my opinion.

As I have indicated in the figure, it is forming a reverse head & shoulder pattern. There are a few points to be noted here. The 'left' shoulder's low is lower than then 'right' shoulder's low. This characteristic in a head & shoulder pattern is bullish. Also note that the institutional investors loaded up on two occasions. One, when it touched the 200 DMA and the second when it cleared 50 DMA with 4 times the regular volume.

Compare the price action to the RSI. The RSI is improving.

Sit tight for more gains.

Also note that Aaple has released new TV ads that is attracting attention.

BOT oversold

Looking at the charts, I feel that BOT is looking attractive.

The stochastics is currently at its lowest level since its IPO. It is currently at 4.5...compare it with the stochastic reading when BOT was trading at 87. It had a reading of 7~.

The trendline drawn since its IPO also gives an indication that it will hold today's close as support and inch higher in the coming days.