Some TA for SEEK Friday Close:
Let me start by saying the weekly trend is up, as is the daily trend as a whole. These facts alone would suggest to buy long.....the trend is your friend. However several charts and oscillators (used for forcasting/identifying reversals) say otherwise. SEEK screams overbought IMO. Looking at the daily chart notice that SEEK has been in a steap uptrend now for about 3 weeks, and that on Thursday SEEK managed to trade at a level that was identified as a base level after SEEK hit $40 17 weeks ago. This bullish push forward was terminated by an earnings release that was a surprise on the negative side. SEEKs primary competition managed to surprise on the upside. This is not good. Not only will the daytraders take notice, but the investors will as well. It would appear after Friday's action that SEEK may be in for a reversal on the downside. Heres why:
First off, one of the less popular indications (and one of my favorite) was that SEEK closed way ABOVE the 21 Day Volume EMA.
The last time the volume was this high is when SEEK came off it's peak of $42 17 weeks ago in a huge selloff of profit taking. This stinks of distribution. Very Bearish.
SEEK traded so strongly Monday through Thursday that it managed to break out above the upper envelope of the Bollinger Bands. Lots of accumulation, in expectation I imagine of great earnings, and a strong market overall. However all was lost on Friday when SEEK closed way below the upper envelope. Support is now marked at 24 15/16. Resistance is marked at 32 1/2. I have mental stops set around 32 3/4 for my short if we breakout again. Bearish
MACD Histogram went negative off a very high peak on Friday. The only times MACD managed to trend this high was when SEEK hit it's all time high, in which MACD marked a reversal the day after which brought the stock down to $22 before SEEK reversed again on the weekly chart. The second time MACD trended this high and reversed was when SEEK hit $42 about 17 weeks ago. SEEK then reversed and settled at $17 1/2 before reversing it's downtrend. Each trend lasting the same length of time. Lower highs, and lower lows durring each occurance. This is not good. I must add as well that on each occurance of a MACD reversal it did not correct the following days and continue it's uptrend. Now this reversal did occur on a historicly weak day for momentum stocks (Friday), but I hold to the charts that we have a valid reversal here. I jumped the gun by going short a day or so, without waiting for a confirmation, but this one felt right. Bad fundamentals, bad technicals....overbought. Very Bearish.
RSI Turned downward on Friday closing at about 62. SEEK was 73 on Thursday (above the 70 mark...very strong). Translated: SEEK had a bearish RSI 70 crossover on Friday close. This is perhaps one of the most common-looked-for bearish indicator of high-flying stocks used by the pros and casual investors alike on every system/scanner I have ever come across. This is not good at all. Very Very Bearish.
The Eastern chartists have something to explore as well. The Candlesticks display a window (gap down) that will be flagged on their scanners....however being that the friday candle is a white candle, it most likely will be ignored. Neutral.
Smoothed Rate of Change (SRoC) proved neutral today....it is flattening out however and has been dead-on predicting the movement of SEEK in the past.....one more down day and it will be a bearish divergence. Currently Neutral.
Long term the trend is up, with signs of loosing momentum. Short term trend is turning down IMO. A few more down days with declining volume below the averages and SEEK will have established a reversal. It will be a rush for the exits....and much to late to really get a good short....it was hard enough borrowing shares on Friday. All of the above could be undone by a single strong day taking SEEK above recent highs.
Good luck, and congrats to all those on getting in for the ride up....I wish I where there to enjoy the fun.
Regards.... |
