Sunday, August 26, 2012

Thurs, Aug 23: BA, DELL, KO, WCRX

Markets on Aug 23 continued their reaction away from 4-year highs, with S&P500 futures notably breaking below 1400 although closing above that level.

Boeing (BA) was a considerable laggard on the DJ Industrial Average, falling 3.3 percent in response to a cancellation of Boeing 787-9 orders by the Australian airline Qantas. The decline brought BA to just above a significant, 3-year price channel. The channel support may not prove durable, though, and a break by $2-3 is a definite possibility given the selling climaxes of about 12 months ago, which pierced the same channel by about that amount.

BA. Aug 2008 to present. Daily candles.
Computer maker Dell (DELL) is likewise experiencing bearish drama, falling to a 3-year low. On the hourly candles chart, meanwhile, DELL is at support from a 3-month channel. Although robustly defined, this channel is nonetheless suspect due to its quite moderate slope, which may make the trendline more likely to fail.

DELL. Aug 2008 to present. Daily candles.
DELL. Jan 27, 2012 to present. Hourly candles.
Coca Cola (KO) is also interacting with support from an approximately quarter-year price channel. Unlike DELL's channel of a similar time frame, in which both boundaries are defined by at least three points, KO's channel is formed in decidedly more minimal fashion and, as such, is less likely to produce durable support.

KO. Dec 7, 2011 to present. Hourly candles.
Warner Chilcott (WCRX), the pharmaceutical company and NASDAQ-100 component, has pierced above a four-month price channel, albeit rallying through the resistance on only moderate volume. Price action performed a similar feat last week, but that rally fizzled and produced a bull trap, which colors this recent bullish move in a similarly suspect light.

WCRX. Apr 16, 2012 to present. Hourly candles.