Interesting Weekend Stock Charts

Nov 3, 2007: 1:25 PM CST

Let’s take a brief look at some charts that have interesting implications or patterns occurring right now:

Citigroup (C):

  • New Momentum Lows, indicating the potential for lower price lows
  • Bearish surge in volume
  • Bearish potential breakaway gap or measured (continuation) gap that filled
  • Bearish Breakout from consolidation range
  • Let’s hope that, in this case, this financial stock does not lead the market

Exxon-Mobil (XOM):

  • Potential Head & Shoulders Top Pattern
  • The “Measuring Rule” for the H&S pattern would take price to $85
  • Negative Momentum Divergence
  • Bearish Increase in Volume on break of neckline
  • New four month momentum lows
  • Breakout from Triangle Consolidation pattern in mid-August has completed

Baidu (BIDU):

  • Baidu.com has almost quadrupled in price since June this year
  • Price is at the upper trend channel
  • Price successfully broke out of a consolidation range (from July to September) on high volume
  • New Momentum high recently achieved
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Comments
  • David,

    Regarding Baidu.com? I would advocate finding a low-risk long entry into this stock, potentially when (if) it can retrace nicely (cleanly) to its rising bottom trend channel and/or its rising 20 period moving average. The stock has risen for six straight days. Let's see if profit-taking and 'top-calling' fade-traders (entering short) can push us orderly back to those levels.

    I might even recommend certain option strategies because the stock is very expensive for most retail traders. Bull Put (credit) spreads might be a great option, especially if there's a pullback. If you don't like the credit spread option, try a Bull Call (Debit) spread. Risk seeking traders can even try outright call buys, which could make more money than spreads, but also carry more risk.

    If you're holding the stock now, congratulations to you, and because the trend is so strong, try to hold on for a larger target in the future and sell if we decisively break the rising trend channel AND the 20 period moving average on high volume and stay below that level for at least two days.

    Thanks, David.
  • Hey Aaron,

    Absolutely. I think the presumed key reversal shocked a lot of people, but the key reversal (gap open higher in an uptrend and then close significantly at the lows of the day on high volume) failure sent an even more powerful signal of strength. Price found support, consolidated at the rising 20 period moving average, and then has rocketed higher, trapping any short and rewarding any long.

    It becomes extremely tempting to 'call tops' and see charts as overextended - and it clearly is - but I can rarely find entry signals against (to fade) such powerful trends. At the same time, it's hard to find signals (like an orderly pullback or retracement to a key moving average or support level) to enter run-away trends.

    Can't wait to see the resolution! We will all keep watching.
  • David Hall
    What is your recommendation? Buy, hold, or sell a little?
  • BIDU is getting ridiculous. The bears thought they had taken control of that thing a few weeks ago on that major reversal day on the downgrade, now its charging higher despite market weakness and breaking new highs daily.
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