For a lot of people, the close on Friday left them with a pretty good feeling about tech stocks in general. One would only have to look at the performance of RMBS, CSCO, BVSN, and QCOM to conclude that the bottom was seen and that the bull was back in charge. On closer examination, especially with these four stocks, you will notice that they each had a lower high for the past two consecutive weeks. Yes, even RMBS after charging ahead almost 15 on Friday is $1.25 lighter than the previous week. Don't get me wrong that was an impressive move, actually a very strong reversal with volume to back it up. So I wouldn't be the guy to advocate running in front of a mack truck. But yet, it's the big picture that I want to contend with, and in the case of RMBS, like almost every other blue chip tech stock, that trend is down. A quick look at its chart (monthly) will show that this is the fifth month in a row where prices have made a lower high ( a fact that is pervasive amongst the generals). Of course lately there has been some favorable patent decisions, a new partership, and a venerable analyst reiterating a 200 price target (remember QCOM). These points plus the positive action in the compx as of late, could easily give the feeling that the bottom is in overall. But yet if you look closely some cracks are beginning to show. ORCL closed badly on Friday hitting lows not seen since the first quarter. Now check out the trading in ALTR. Both of these stocks have placed themselves in do or die positions this coming week. There's going to be big time pressure to reverse, if not, you're going see a more pronounced breakdown in their price. Check out XLNX - the bottom could fall out of what appears to be a right shoulder. QCOM is another stock that I've been pointing out. Despite the pop on Friday, it had a weak close when looking at the week as a whole. Now add LVLT and GBLX poor weekly performance, and ask yourself can QCOM remain an island of refuge for a beaten up group. Based on its chart I would say no.
To say this is a big week coming is an understatement. CSCO has carried this market before and the bulls will be relying on it once again. With the rest of the market running into some key resistance areas, this week's trading should offer some important pieces of the puzzle.
Good trading.
SO |
