Option Investor
Market Updates

Checking the technicals to confirm fundamentals

HAVING TROUBLE PRINTING?
Printer friendly version

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.

Jeff Bailey

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.

Jeffrey Canavan
Assistant Analyst
www.premierinvestor.net

Intraday Update Archives