| Technical Analysis $CRX $TRAN VLO ADM |
|
| Thursday, February 1, 2007 |
|
Closing Bell Update - Technical Analysis of the $CRX, $TRAN, ADM,and VLO
On this update I will cover the $CRX again. I want to point out that the $CRX is now back to levels not seen since May of 2006 when the intermediate top in the commodities was put in. Please review last weekend's update.
Morgan Stanley Commodity Related Equity Index stocks ($CRX) - Daily Chart - Bullish Ascending Triangle Pattern
The daily chart illustrates that the $CRX is in the process of forming a bullish continuation ascending triangle pattern. It is also in the same pattern on the weekly chart. As you can see, the $CRX spent most of the summer months correcting in a lateral triple combination pattern within a wave (3) to wave (4) pullback. The $CRX then formed a bullish double bottom during the summer and early fall months of 2006. This retest of the lows marked the bottom of the XWY wave. If you look at the moving averages you can see that they bottomed there as well. As price stalled and then began to reverse course, the moving averages and indicators and oscillators followed suit. This marked the beginning of a 1-2-3 Bullish trend reversal which was confirmed with a break out above the intermediate term downtrend line formed in wave (3) to wave(4). A new intermediate trend established itself and the $CRX rallied upwards to test the 2006 highs in early December. At this time the $CRX then paused for a short term ABC pullback/dip down to test the uptrend line. This bullish price movement set the $CRX up for a strong rally into the first quarter of 2007. Furthermore, you can see that the $CRX has taken out the December's highs and is moving parabolically upwards towards resistance at $650.76. The indicators and oscillators are in a bullish trend reversal, showing bullish divergence and are moving up along with price. This is a sign of a strong bullish trend.
Dow Jones Transportation Average Index - ($TRAN) - Daily Chart- Bullish Ascending Triangle Pattern
The daily chart illustrates that the $TRAN, like the $CRX, is in the process of forming a bullish continuation ascending triangle pattern. As you can see, the $TRAN also topped in May 2006 and spent the summer months in a classic ABC zig zag correction downwards. The $TRAN placed it's lows at 4134.72. A successful retest of the lows in early September confirmed that the lows were in. This, in turn, sparked a 3 day rally on heavier volume which caused the $TRAN to break the wave 3 to 4 downtrend line. The 123 bullish trend reversal marked the beginning of a bullish 5th final wave that the $TRAN has been in since October 2006. In addition, you can see that the $TRAN has been trading in a parabolic move up since it's recent retreat to briefly test the moving averages in mid January. As you can see, the $TRAN is close to retesting it's 2006 highs at 5013.67. The moving averages, indicators and oscillators confirm the bullish trend. This bullish chart signals a strong bull market for the year ahead. Price target is still quite far off for 2007.
Archer Daniels Midland CO. - (ADM )- Weekly Chart - Bullish Ascending Triangle -Optionable
ADM is a current portfolio stock and it is an ethanol play. This is my top Ethanol play. The weekly chart illustrates that ADM has spent the last 9 months in a wave 3 to wave 4 ABC corrective channel. Remember corrections always occur against the primary trend. The correction is not over until it resumes the primary up trend by breaking the downtrend channel at $35.00. As you can see, ADM is taking that downtrend line out this week. In addition you can see that ADM bottomed in November, and stalled in December. Increasing volume has come in to support the stock since the 52 week lows were placed. Furthermore, you can see that the indicators have bottomed and are beginning to curve upwards. The buy alert for ADM was triggered at $35.52. It is an investor trade, meaning that it is meant to be held for 6 to 12 months or until the revised price target is reached at $50.00. That would be a gain of 15 points.
Valero Energy Corp. - (VLO)- Daily Chart - Energy Sector - Break out above Triple Triangle Consolidation Pattern - Optionable
VLO is a medium risk Oil play. This is a macro play. The daily chart illustrates that VLO has spent the last 12 months in a wave (3) to wave (4)Triple Triangle consolidation Pattern. It has spent the last year in a WXY lateral consolidation move. You can see that the Y wave has been completed with a move to test the previous lows. The Y low was placed at $46.77. Notice the surge in buying volume at the last 2 lows. This is bullish action. The optimal time to have entered this stock would have been at the third retest of the 2006 lows that occurred at the beginning of January 2007 at $47.66. VLO has now broken it's corrective downtrend line(DTL) at $55.00 and today it gapped up to trade above the 200 day EMA. VLO has now resumed it's primary uptrend, and is continuing on to complete a bullish 5th wave. The moving averages have bottomed and there is a triple moving average cross over that occurred this week with the break of the DTL. Indicators and oscillators are in a 123 bullish trend reversal. The RSI and PPO are showing bullish divergence. The buy alert for VLO was triggered at $51.01. It is a swing trade, meaning that it is meant to be held for 3 to 6 months or until price target is reached at 20 points higher at $70.00.
Andrea Victoria Friend aka Daisy
Editorial Assistant for Trending123.com
daisy@trending123.com
$CRX
$TRAN
ADM
VLO
|
