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Saturday, February 23, 2008 

The Recession Is Under Way & Trade Ideas for next week

There seems to me that there is a very high possibility of economic recession in US in front of us, and probably (I’m not sure) we’re living now that state. With slipping jobs data showed by the decline in January payrolls and the rising unemployment rate, a weak retail chain store sales reports with a surprising falloff in the ISM nonmanufacturing index, there is no doubt that the Recession is under way. Plus, on Thursday the Federal Reserve Bank of Philadelphia reported regional manufacturing fell more than expected. Investors were also disappointed with another drop in the Conference Board's monthly index of leading economic indicators. No matter what people are saying, FED chairman was clear, the economic conditions are deteriorating significantly too fast. I’m not an expert in economic fundamentals indicators, but for a guy like me, that normally spends too much time reading economic books, there is no reason to not believe in this scenario, however I have just a simple question. Will be a deep or just a soft recession? I’m pointing to the second one, but I’m really extremely cautious right now. Things are not good, neither indications give me a fresh air to put this worry out off my mind, so as I said before play on the defensive side. It will be very depressing for all of us see the biggest world economy entering again in recession, even being just for some time. Risks to the downside are very high.

Now take a look at my trade Ideas for the week ahead.

The area of previous resistance of FSLR around $200, now has become support. If the support holds, then it signals an intermediate to short term trend change. In this case it quickly rise away from support, but if support is broken, then expects a move to $143 ( I don't believe in this cenario ). Buy point is on the day it breaks the upper line mentioned on chart on heavy volume.

MSPD was a nice play at the down trendline, however, it looks like there is more downside here. Stock broke on Friday one important support with heavy volume, this is a bearish signal. I believe this move will continue. There is no support below.

JASO - Looking at the daily chart, this stock is being supported around $15.70 area, near its 200-day moving average. Although MACD show positive sign with fast line rising on top of slow line, this is not yet the time to buy as the stock is still weak as 20-day moving average is still falling and the stock is sitll on downtrend. A close below $15.70 with volume, it will be the signal to sell.

CNXT is at critical support near $0.55. Stock could go either way depending on how it deals with the major trendline. Chart doesn't look good for longs on stock.

VIVO formed a symmetrical triangle pattern during its uptrend which led to upside continuation. The buy point is when price clears the upper trend line and volume expands to take the stock higher. Next week keep an eye on VIVO shares.

LVLT - Looking at the daily chart above, it shows weakness as the stock is trading below its moving averages. In addition MACD is below 0 showing the stock is in bear market. The only positive signal is KD where K line is about to cross on top over D line and may start a little bounce back rally. Resistance is now at $2.50. Stay tuned on her.

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. Have a nice weekend !!!


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Hello AC,

Very interesting post this one. I agree with you in all things. Recession may be under way.

Have a nice weekend friend !!!

Pro Investor

Thank you for the analyses. This swingtrading newbie really appreciates it.


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About Me

  • I'm a 48 year old Independent Trader using proprietary technical analysis with more than 20 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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