Alibaba Stock Breaks Down From Key Support Levels

Lam Research Corp. (LRCX) may be outlining a double top formation on the charts and if we read this correctly it could mean that LRCX is vulnerable to a significant decline in the weeks ahead.

In this daily bar chart of LRCX, below, we can see a peak in early June followed by more than a $20 pullback and a subsequent rally to a slight new high. Prices are still above the rising 50-day moving average line as well as the rising 200-day moving average line. The daily On-Balance-Volume (OBV) line has followed prices higher the past 12 months. Since early June the OBV line has moved down and up with the price action. If the OBV line continues to weaken it will be a signal to us that sellers of LRCX are being more aggressive with heavier turnover on days when the stock closes lower.

The Moving Average Convergence Divergence (MACD) in the lower panel looks like it has started to narrow again towards a take profits sell signal as well as a bearish divergence when compared to prices.

In this daily candlestick chart of LRCX, below, we can see a large bearish engulfing pattern the first peak as well as the same pattern this Wednesday and Thursday. This chart also shows the potential double top in the OBV line as well as the narrowing MACD indicator.

In this updated weekly bar chart of LRCX, below, we can see a parabolic rise the past two years from near $60 to over $160. Prices are extended above the rising 40-week moving average line. The weekly OBV line has confirmed the advance and watching it going forward should tell us if sellers become more aggressive. The weekly MACD oscillator turned lower in June.

This Point and Figure chart of LRCX, below, shows the potential double-top pattern. There is potential support below the market but if it breaks we could have a significant risk going forward.

Globus Medical, Inc. (GMED)

stock had a short but swift decline at the start of July, followed by a consolidation. The price has been attempting to break out of the consolidation since July 17, and the strong surge higher on July 25 helped confirm the breakout. This signals that another wave up, in alignment with the long-term uptrend, could be commencing. Throughout the year, when the price has broken higher out of a consolidation, it has typically moved up by 8% or more. That puts an estimated profit target just above $35. A stop-loss could be placed below $31.50. The risk/reward can be improved by trying to obtain an entry price between $32.65 and $32.50 (slightly better than the July 25 close of $33.10). (See also: Investing in Medical Equipment Companies.)

Read more: Short-Term Breakouts Point to Higher Prices in These Stocks | Investopedia http://www.investopedia.com/news/shortterm-breakouts-point-higher-prices-these-stocks/#ixzz4nzi1Z7KC 
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The stock markets are sitting near all-time highs, and technology has been the strongest sector this year, but it's lagged recently as financials, healthcare and industrials have shown strength over the last month. But a negative divergence in the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) vs. Stock Price has been forming, and it deserves close a close look.

This means that while prices have rallied, the momentum and relative strength of the market have made a lower high compared with a previous peak. And when market breadth doesn’t keep up with price, this can indicate that a reversal is imminent.

This negative divergence between the RSI and MACD​ is a sign that market breath is declining, meaning that fewer stocks are participating in the rally. And when a market is being propped up by only a handful of stocks or sectors, if those stocks start to roll over, the market can suffer a sharp correction because there’s nothing left to support it. The SPDR S&P 500 Trust ETF (SPY), which tracks the S&P 500 index, has held between $240 and $242 for over a month. But if this level is breached, the market could be in for a correction, as this would be a major sell signal.

One explanation for this negative divergence is worth mentioning — one that doesn’t necessarily point to a correction. The RSI negative divergence comes on the heels of massive overbuying at the end of February, when it reached an unsustainable level. Stocks are unlikely to rally so hard that the RSI hits 80, as this is extremely overbought, so to expect the recent run-up to match this RSI high is unrealistic.

The reason it is so unlikely to hit 80 is because usually when a stock’s RSI hits 70, a pullback or at least a pause, ensues because this is the level that is widely considered to indicate that a stock is overbought. Then any slight pullback would bring the RSI down to a more reasonable level. Hence, hitting an RSI of 80 is even more unlikely.

Read more: A Big Red Flag Is Pointing to a Stock Correction | Investopedia http://www.investopedia.com/news/big-red-flag-pointing-stock-correction/#ixzz4mOigelGR 

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The PowerShares QQQ Trust (NASDAQ: QQQ)

rose 0.13% over the past week. After moving along its lower trendline support, the index rebounded toward its 50-day moving average at $138.96. Traders should watch for a breakout from these levels toward upper trendline resistance at around $140.00 or a move lower to test S1 support at $134.76. Looking at technical indicators, the RSI appears neutral at 46.64, while the MACD remains in a strong bearish downtrend after its trendline breakdown last month. (See also: Are Large-Cap Tech Declines a Buying Opportunity?)

Read more: Stocks End Mixed After Shortened Holiday Week | Investopedia http://www.investopedia.com/news/stocks-end-mixed-after-shortened-holiday-week/#ixzz4mMnzDBCl 
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As technology stocks continues to weaken, one bellwether is close to breaking down to new lows not seen in a couple of months. That would be Apple.

Shares have continued to slide over the last few weeks, albeit at a moderate pace: As of Friday, Apple (AAPL​) is sitting above $142.50, a level that it touched and held four times in June. But if the stock breaks below this key level, it’s likely to trade down to $140 and below.

Here’s why:

1. For more than a month, $142.50 has been Apple’s support, and a breakdown would bring about new weakness and signal to market participants that a bigger correction might be on the way.
2. Just below $141 is the 38.2% retracement​ level of the stock’s rally this year. Should this retracement fail to hold, it’s likely that Apple sells off down to its next major retracement support of around $136.
3. With third-quarter earnings due in a few weeks, a breakdown going into that report will only dampen sentiment and cause valuation concerns. That could accelerate the move to the downside into earnings if investors are nervous about holding the stock through the report.

Apple is likely to see increased volatility over the coming weeks since we are at the end of a descending triangle pattern. This is when there is a horizontal base supporting a stock and a down-trending resistance line as well. Usually these patterns see breakouts to the upside.

This makes the $142.50 level more important, because if it holds, the price is more likely to break out above the descending triangle. But a breakdown below it would negate this pattern and result in a downside move to the next major support level.

Support Levels to Watch

The next logical level would be $140, because the stock found support there at the end of March and the middle of April. However, this is more of a psychological support given the round number. Technically, a level at which to look for a bottom would be $136, the 50% retracement of this year’s rally.

Read more: Why Apple Stock Is at a Critical Point Right Now | Investopedia http://www.investopedia.com/news/why-apple-stock-critical-point-right-now/#ixzz4mMmj0NjM 

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Cisco Systems (CSCO) is undergoing a process of consolidation on its daily chart that could result in a volatile move higher. Shares have been trading in a narrow horizontal channel pattern, which has compressed the price range to a near-breaking point. Last month's large gap lower created an upside resistance vacuum, and the momentum and money flow indicators suggest the stock is prepared to fill the void. Here's the current technical condition of Cisco and the breakout level that could trigger an initial 5.5% rally.

The stock is managed a slight rebound after last Friday's sell off before turning lower Wednesday morning. Intel is piercing a key trendline as this week comes to a close. It appears that overhead moving average pressure is in control and will likely drive shares lower in the near term.

Intel is in danger of a deep pullback, one that could drop it another 5% from current levels. There is a very solid support zone in place near the 2017 lows. If this area, just above $34.50, is clearly taken out, more downside is ahead. The next level of support rests near $33.50, INTC's post-election low. A new base here would produce a very low-risk entry opportunity.

Investors who are interested in more targeted exposure to companies in the solar sector may choose to analyze the top holdings of the TAN ETF. First Solar, Inc. (FSLR)

is the fund’s top holding and the recent price action, as shown on the chart, suggests that this is a company worth keeping an eye on. Like the case of the TAN ETF above, the bulls have been able to push the price toward the major resistance of the 200-day moving average. However, as you’ll notice in the case of FSLR, the price has been able to close above on above-average volume. The break above the 200-day moving average is a technical signal that suggests the trend is in the process of reversing. The final technical level of resistance that needs to be overcome before a true reversal is confirmed is the descending trendline shown on the chart. Those who aren’t convinced that the trend is reversing may be wise to remain on the sidelines until the price is able to close above the February high of $38.50. (For more, see: Top 4 Alternative Energy Stocks for 2017).

Read more: Solar Stocks Are Facing Major Resistance (TAN, FSLR) | Investopedia http://www.investopedia.com/news/solar-stocks-are-facing-major-resistance-tan-fslr/#ixzz4h3rh8bIp 

Flir Systems, Inc’s (FLIR) technological and military orientation offers a twin benefit to market players, given the Trump administration’s commitment to higher defense spending. It stalled just above $37 in 2011 at the tail end of a 2-year recovery wave and failed a breakout attempt at that level in 2014. The stock returned for a third visit at the end of 2016 and dropped into a sideways pattern that’s holding close to that resistance level.

This coiling action predicts a multiyear breakout that tests the 2008 all-time high at $45.49. The sky’s the limit once that level gets mounted, favoring a rapid advance that could offer outsized gain to well-timed long positions. Early trade entry ahead of a breakout makes perfect sense because the narrow trading range supports relatively tight stop losses in case of an unexpected downturn. The company reports earnings on April 26.

The self-updating ('dynamic' chart for easy reference what happens next..

Here is the dynamic chart to follow the situation:

Here is the dynamic chart to follow the situation:

It's heavily overbought, but there are good reasons to believe there is a turn-around in the company's fortunes (see for instance here) and the rise has been on heavy volume so it's not likely to be a good short.

But we'll still be following through the dynamic chart, as usual:

As ever, below the dynamic chart for easier reference how the situation developes:

For instance, International Business Machines (IBM International Business Machines Corp IBM 175.81 +0.09% ) and Salesforce.com (CRM Salesforce.com Inc CRM 83.48 -0.03% ) announced that Watson and Einstein would join forces to create the biggest AI platform in the space with over a billion users per day. The move could provide the companies with a monopoly of sorts when it comes to enterprise users. From a technical perspective, traders should keep an eye on both stocks as they appear ready to breakout to new highs. CRM has the greatest momentum with its 21% rise so far this year, but IBM has outperformed over the past 52-weeks by about 8%. CRM’s stock appears poised to breakout from its all-time high of $84.48 reached back in mid-2016 with the momentum from its deal with IBM. However, the stock’s relative strength index (RSI) appears overbought at 65.49 and its MACD​ remains in a bearish downtrend, which means that traders may want to wait for a modest pullback before a breakout.

2 AI Stocks Set to Break Out to New Highs (IBM, CRM) | Investopedia

Here is the dynamic chart for easy following how the situation develops:

The dynamic chart for easy following how the situation develops:

And the dynamic chart to follow the development:

And the dynamic chart to see how the sitiuation develops: