January 29th, 2014
by Jeff Pierce, Zentrader
Over the weekend I offered to look at any one stock you may want some additional insight on during the sell off at the end of last week. Usually I just response to each individual but this time I decided to create one post where all of the stock analysis can be found for all to see.
Q: I would like your opinion about a pharmaceutical stock thats just coming on the radar- VRX. I would like to know your opinion of purchasing , say another 200 shares for long term investment.
A: I believe VRX is susceptible to a deeper correction based on how long the RSI has remained in an over-bought state. My targets are between $105 - $110, if you where looking to add to a position that you are already currently invested in.
Q: I don't currently own CELG but I'm looking for an entry.
A: The $135-$140 range should provide good support if you were looking for a swing trade in CELG. Also watch the RSI as it trades down near the 40 level, this should coincide with a short term bottom in this stock.
Q: How about GWPH? I don't own it and I missed it completely but I'm looking for a safe entry to go long on it. Please let me know. Thanks!
A: I agree that you have missed it and if you do want to own this stock your going to have to be patient and let it come back a bit. It needs to have a deep correction and work off some of its over-bought condition. If I was looking to buy this it would be in the $30-$32 range. Buying it any higher than that level would expose yourself to a lot of risk as it does have the potential to have a swift pull back. I don't normally cover stocks that have a average daily volume of under 500,000, so please be aware of that for next time.
Q: I am currently Short - McDonalds [MCD] stock from 95.45. Your analysis of downside price targets would be appreciated, thanks.
A: Based on my analysis I believe McDonalds has a good shot at breaking through the 93 level of support and could trade down to the $86 to $88 in a fairly short amount of time, that would be a good target objective for one who is short at this stock. It is my belief that this bullish cycle that McDonalds has been in since 2006 is over.
Q: I would like your opinion on GE as I am currently long and have owned this position with the long-term gain in IRA.
- Not liking the recent -price action and Fri's close below 6-month 50%-Fib of $25.34
- Based on Fundamentals, news, and blog reading I'm waiting for a bounce to buy more, but I don't want to loose my gain. I consider Fri's close to be out of the uptrend and EMAs are pointing down.
- Even the 1/22 average broker score was Bullish.
A: GE may temporary bounce up into the $25.50 to $25.80 level, but over all I think that this stock is going to pull back much further. As you know being a tradewithZEN subscriber I closed out of this position back in November at $26.90 and I no longer feel its a stock worth covering on a long side.
Q: I'm currently holding ARTX and the stock has come down almost 25% from its high. Please advise if it is likely to rebound and if it is advisable to hold on a 1 month time period.
A: Given that I don't know your entry price I'm gonna give my analysis on this as if I was thinking about buying the stock without having a position. Given current levels and how strong of a rally it had of the November lows I believe now represents a decent level where I would potentially take a 1/3 position. Expect some volatility and also know that there is an outside chance that this pulls back to $2.40 to $2.50 leve. That is why I only enter a small position now because I do believe there is some downside risk. Having said that, there is an opportunity for this stock to rebound from current levels because it has been so strong. If you are under water in this position, I would use any rallies up near the $320 to $330 to unload my shares if it moves higher before it pulls back to my target of $2.50.
Q: Looking to buy.
A: Well I'm not crazy about the daily chart of CHK, when viewing the weekly chart it appears there are strong support in the $24 area. It may not make it down that low, but if I was looking to buy this that's the level that would offer the best reward/risk.
Q: I own AFOP at $17.25 should I cut and run or is it worth holding presently.
A: I really like the look of the weekly chart of AFOP and believe the worst of it is behind it. When you view the RSI you see how last spring and summer this stock was really strong and a pullback into the 40 range which is exactly what a strong stock should do and it should bounce in that level just as it has. I believe that this stock will trade back up into previous resistance between 20 and 22 and I think once it gets back to the 20 level you should take half off and said a stop at your entry price and allow this some flexibility to run higher because it could take out previous highs and move beyond that.
Q: Please give me your opinion on IDRA.
A: Given the run that this has had since November 2013 from $2 a share all the way up to $5.50 share, I believe this is put in a short term top and needs to have a decent pullback and reset before this one moves higher. A good level to start accumulating the shares of this stock would be around $3 a share, I would scaling a 1/3 position there and average down when it hit $2.50, if it hits $2.50. Often times when I see a RSI that is a strong as it was in August pullback and not go below 50, and then rally back up above 70 it normally signifies a stock that is over-heated and it needs to have a deeper correction to remove some of the bullishness from the stock.
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