Dear Friends,
It’s the beginning of another new week again, and I have barely enjoyed myself that I have to think of what the market will be for the next 4 days and which stocks to trade and hopefully make enough returns to enjoy the Christmas parties. Its Christmas week and the market will be closed on Friday for Christmas and Thursday’s market will also be closed 3 hours earlier. The week before Christmas is typically quiet and with many traders already enjoying their yearly returns, it will get quieter as the week wears on. Historically the week between Christmas and New Year’s Eve will be slow and quieter and with that in mind, I will be looking at closing all my 50% of the 30-20-50 trading positions as well as buying in early if the “buy” signals warrant and sell before the Wednesday. I will also be taking a longer rest and will not be trading actively during this period. There will be some important events to watch the next few days and since KUTE has been recommending energy and oil related stocks, it will be wise to watch the OPEC meeting on Tuesday and the current Iran-Iraq current conflict. We will also have a clearer picture if the economy is recovering well with the 3rd revision to GDP and the existing home sales report, both on Tuesday. Together with personal income and spending, new home sales and initial jobless claims and a likely thin volume market, I am expecting the prices to trade within a broad range. The weekly market technical are bearish. Cycle Trend is indicating that the market is ranging and a decline for DJIA is expected. This is confirmed by the weekly candlestick formation of a bearish engulfing pattern. Interestingly the daily Cycle Trend is still indicating an potential upside advance and the candlestick is an “buy-if” formation of a white spinning top and bullish harami. Thus my decision will be to buy early and sell once it hit the stocks’ price returns targets and stay out of the markets once the deals are squared.
The stocks selected for this coming week are DOX, NOV, NE, PTI and MGLN. The only inclusion in the list not previously mentioned is PTI, so I will look into the fundamentals of this company, and only analyze the technical for the rest of the selected stocks.
Patni Computer Systems Limited (PTI) is primarily engaged in the business of information technology consulting and software development. Most of the business of PTI is subcontracted from its subsidiary companies in the United States, United Kingdom and Germany. The Company provides multiple service offerings to its clients across various industries comprising financial services, manufacturing companies’ communication, media and entertainment, product engineering services, and others. This stock is highly rated by analysts and I like its operating and free cash flows. The company’s operating income has declined over the last 3 years though its gross profits have increased. Though the expenses have increased over the same period, I am still comfortable with its financials. For the technical, Cycle Trend is not indicative as the patterns generated do not conform to the price performance over the last few periods. The weekly candle formation is a white opening marubozu and the daily candle is a hold, so my decision is to wait for the stock to decline to 0.5% of last Friday’s close of $20.29 to buy.
As for NOV, the weekly Cycle Trend is still bullish, however the weekly candlestick is a black candle with the indication to hold, and the daily candle is also a hold. I will not enter new trades because of the bearish black weekly candle even though it calls for a hold/wait. I will wait to square off my current 2 positions. NE’s Cycle trend is indicating the continuation of the upside potential, however its weekly candlestick formation is a high wave, i.e. the market is very indecisive. With the daily candle indicating a “sell-if” formation, I believe it will be prudent to monitor the daily and intra-week candle confirmation before making any decisions. DOX cycle trend is indicating a slight decline for the week and the weekly candlestick is a “buy-if” white spinning top bullish harami which is not a strong bullish sign and requires next period confirmation. The daily candle is however a white opening marubozu which is also not a strong bullish sign and requires next period confirmation. I will not add more position to my DOX holding and hopefully the daily candlestick formation is confirmed for me to sell the stock. As for MGLN, the Cycle trend is very bearish and with both the weekly and daily candle indicating hold, I will stay out of this stock for this short and potentially quiet trading week.
Have a great week.
Francies Cheng
BBus MAppliedFinance
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