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Saturday, November 01, 2008 

Trade Ideas For The Week Ahead - CBST, AFAM, GOOG, RIMM

The FED has slashed a key interest rate by half a percentage point again this week to near historic lows, as it seeks to revive an economy hit by a long list of maladies stemming from the worst financial crisis in 70 years. The cut marked the second half-point reduction in the funds rate in October, after on Oct. 8 in a coordinated move with foreign central banks the Fed slashed the rate to 1.5 percentage point. In a brief statement, the Fed said that the "intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and business to obtain credit." The central bank also said that "downside risks to growth remain" holding out the promise of further rate cuts if needed. Even with this action taken by Fed to revive the confidence on Wall Street, I believe the turbulence will persist for a long time. US has lost jobs every month this year and the unemployment rate now stands at 6.1%, but the worst may be yet to come with the economists believing the unemployment rate will hit 8% by the spring of next year. The economy is still fragile and without signs of life. Investors will have to deal now with a severe credit crisis and what could be the worst recession in at least two decades. Let's keep the faith, but honestly I'm not optimist.

Chart courtesy of www.stockcharts.com ( click to enlarge )

RIMM is closing in on breaking through at trading range resistance level at $52.50. If the stock can break through, we should see an increase in volume as the stock moves higher. The stock can move quickly, so watch it closely again on Monday. However, if the stock fails to move up next week a protective stop loss should be placed at $46.40 to protect the position. Technically the stock now shows positive sign as the stock is now trading above 5 day moving average with KD rising and MACD now above 0. Recent surge may spur profit taking but for the long term the technical is not looking good.

Chart courtesy of www.stockcharts.com ( click to enlarge )

AFAM is one of the hottest stocks of the market right now. The stock broke triangle resistance with good volume over the last two days. This breakout should spark some strong momentum and you've take a look at it. All indicators are bullish and point to more upside.

Chart courtesy of www.stockcharts.com ( click to enlarge )

GOOG seems to have found support, as the stock has consolidated the past three sessions. Thursday, the stock closed positive and looks like it wants to break out of this range. Resistance for this breakout is $372, which was Thursday’s high of the day. GOOG has good upside potential, so watch the stock closely next week.

Chart courtesy of www.stockcharts.com ( click to enlarge )

CBST broke out to new 52-week highs onFriday, as the stock hit a high of $25.51 on the day. The stock could slow down at the higher level, so take profits if the stock will not break through. If the stock does stall out, keep watching and look to buy when it breaks through later. The large expansion in volume over the past few days suggests the buyers are very interested in this stock.

Disclaimer : Trading stocks involves risk, this information should not be viewed as trading recommendations.The charts provided here are not meant for investment purposes and only serve as technical examples.

That's All. See you Monday !!!

AC

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  • I'm a 43 year old Independent Trader using proprietary technical analysis with more than 18 years experience of investing in the US stock markets. I started this blog in 2006 simply as a way to share my thoughts about capital, risk management, and trading. My blog contains only my personal opinion and is provided for informational purposes only.

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