This morning's rather seemingly broad upgrade of some chip stocks by Merrill Lynch should have traders and investors checking the supply/demand charts to try and uncover those stocks that look to have demand outstripping supply. The thought here is "if these stocks are going to do well due to a perceived turnaround in fundamentals, then I want to be bullish in those stocks where demand is in fact already outstripping supply and hints that the market agrees with the upgrades."
Texas Instruments Chart - $1 box
Shares of Texas Instruments (NYSE:TXN) have broken above downward trend recently and gave a double top buy signal at $34, then followed with a spread triple top buy signal at $35. Hmmmm.... two buy signals back to back and break of downward trend. The vertical count with today's trade at $36 give us a preliminary bullish count of $49. This stock looks bullish to me and evidently Merrill Lynch feels the same today.
Priceline Posts a Profit
Priceline (NASD:PCLN) posted a profit of $2.8 million, one of the first dot-coms to do so. Revenues came in at $364.8 million, which compares to $352 million a year ago. The company also reaffirmed revenue and earnings guidance for the third quarter.
Priceline Point and Figure Chart
Point and figure chartists were alerted to a change in the supply/demand picture when Priceline gave a buy signal on its point and figure chart in January. The bullish price objective of $9.75 that buy signal gave has remained intact, even as the stock consolidated into a triangle for three months. PCLN finally broke out of that in April, and has been moving higher, though violently, since. Last week the stock came dangerously close to giving a sell signal at $7.00, but today's news has temporarily put a halt to that. So is Priceline a good buy now? Well, demand is still in control of the stock, but PCLN has already achieved its bullish price objective of $9.75, and there is resistance at $10. That doesn't mean that Priceline can't move higher, but might need to fight through this level. As long as a sell signal is not given, demand is still in control.