Schaeffer's Trading Floor Blog

ADBE

by 5/3/2005 1:33 PM
Stocks quoted in this article:

Continuing from the post below, Adobe Systems (ADBE) is a good example of a vulnerable situation. This stock, which I touched on yesterday, made the scan for stocks with little skepticism. In yesterday's post I noted that from Wall Street's ratings to short interest to put/call ratios, there was little evidence of skepticism. Now let's take a look at the daily chart...


Created with SuperCharts by Omega Research

Here you can see an uptrending channel that highlights the steady uptrend that had been in place since early 2004. However, the sell-off in early April pushed ADBE below the lower rail of this channel and the subsequent bounce failed to retake this former support. Also note how the April plunge bottomed at the same level that provided support to a pullback in January.

Adobe had been a strong performer but now the uptrend is showing signs of deteriorating. The sentiment, though, doesn't seem to suggest that traders are braced for a break of that support zone. This implies that a break has the potential to catch the optimists off guard and potentially add further selling pressure as they unwind their exposure. That is what I mean by vulnerable....


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Contrarian Note

by 5/3/2005 1:12 PM
Stocks quoted in this article:

Earlier this morning I mentioned that I had a chance to do a little stock research that I would share. The research involved running a query to return stocks that had little in the way of skepticism. However, as I have previously discussed with regard to contrarian analysis, a lack of skepticism does not dictate that a stock has to head lower.

In fact, you might expect an uptrending the stock to elicit a degree of optimism. In my view, running a scan like this merely gives me a starting point to find that stocks that could potentially be vulnerable. I will post some specific examples of what I mean, but I thought this note might be worth reviewing...


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Index Check

by 5/3/2005 12:13 PM
Stocks quoted in this article:

We enter the lunch hour on a lethargic note...

For the most part we continue to see a mixed picture as most groups mull around breakeven ahead of the Fed. Oil and natural gas related stocks remain under pressure as those indices give up much of the gains earned yesterday.

All-in-all, this is somewhat typical of the sluggish action we tend to see ahead of events such as the FOMC as traders are reluctant to jump on momentum before the big announcement...

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Into the Fed

by 5/3/2005 12:04 PM
Stocks quoted in this article:

While the topic of whether or not the Fed will use the phrase "measured" in its statement is debated...I thought I would add the top five "phrases" that I am looking for...but have a feeling I won't see...at least not overtly.

  1. Yes, we are confused about what to do
  2. Yes, there are many reasons to be worried
  3. Yes, the rising price of oil is one of them
  4. Yes, we are afraid that the market would tank if we said what we really thought
  5. Git-R-Dun (I just want to see the Fed Chairman utter that phrase)

All joking aside, I think that we remain in an environment where the Street continues to shrug off concerns. As Bernie and Todd Salamone pointed out in yesterdays column - "It's the Nation's Stag Party, and I'll Cry if I Want To" - there are a number of potential concerns on the economy that are bubbling to the surface, yet the reaction has been complacent at best.

This complacency puts the Fed is in a difficult situation as they don't want to be the ones to bring the Street back to reality, but if the economic data continues to weaken, they may be forced to.

If you haven't read yesterday's article by Bernie and Todd, make sure you do...

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One to Watch - BSX

by 5/3/2005 11:31 AM
Stocks quoted in this article:

While the action remains tame...I thought I would take the opportunity to work on my weekly column for the homepage. For those interested, I am revisiting Boston Scientific (BSX) which I profiled on the homepage back in January. As the updated weekly chart and data below shows, the shares have continued to trend lower, yet optimism remains high. The full commentary should be posted on the site later this afternoon...


Created with SuperCharts by Omega Research

  • Percent of analysts tracked by Zacks who rate the stock with a "buy": 68%
  • Number of analysts tracked by Zacks: 22
  • Short interest as a percent of float: 1.4%
  • Short interest ratio: 1.605
  • Put/call ratio percent rank: 8%


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