Al:
I have just spent some time working my charts, and the best description I can come up with, nextel appears to be in no mans land. This is a term used in tennis for a place you do not want to be, mid court. Either move to the net or get back to the baseline.
What makes it more difficult to define the movements of nextel in the near future is its addition to the S&P500. Anytime a the status of a stock changes, it is difficult to rely on the patterns of the past(back testing) to prognosticate the future.
I use well defined channel lines to plot nextels moves up and down. As we speak, nextel is sitting on the bottom of a channel line that began on January 9th and has remained in tact for a three month period resulting in a 12 point increase in price. The upper end of the channel is approximately 36. The difficult question, how much momentum has nextel lost, ultimately momentum is the ingredient that will keep nextel in its upward channel. If the current retracement to 31.5 reverses and the stock starts up, we remain in the channel and 36 remains a possibility. If nextel has lost its momentum, it will fall out of the channel and retrace back to 30 which is the 50ma. Should this occur I would expect a sideways movement to develop, hopefully, between 30 and 34, and continue until the next leg up begins. The problem, if a market correction develops, I can see nextel retreating to 28 during the correction with a rapid move back to the sideway envelope of 30 to 34.
Clearly, we have lost momentum for the moment, and until the catalyst for a resumption of that momentum appears, the above is likely to happen. The reference to the current no mans land, I do not believe nextel will remain in the 30 to 34 channel for very long, it will either drop back to 28 or it will make the move to 36. My best quess the motivation for the next move up will come from the international front which will be incorporated into analysts reports. Once recognition for a flow of funds from the international markets becomes apparent, price targets will be raised for nextel, and the stock will move up. The big question, when.
Ken |
