Click chart to enlargeWe have a long history with LDK. We've been in and out of the stock based on its trend channels for the better part of a year. Now that LDK has broken out of its trend channel, its next moves are far less predictable than they have been while its channel was intact. While it does not fit our profile of a stock trading in a defined uptrending channel, we have been asked to comment on it.
What we see is a stock that is now trading above an uptrending moving average, clearly in an uptrend. The uptrend is represented by the diagonal support line below its recent lows. This trendline is not that significant, though, considering it's only been forming for 6 weeks. Still, it's all we have to go on for now. LDK gapped up from 30 to 31.5 in early April. It has formed a support level in the 31 area, although again, this is a very short term line, making it only significant to very short term traders. This is represented by the upper of the two horizontal green lines on the chart.
The lower of the two lines at 30 was former resistance which has now become a significant support level. Technical traders often look to see if gaps will be filled or not. It will be very bullish for LDK if it can avoid closing the gap between the two horizontal lines on the chart. If it fills the gap and closes below 30, it will likely continue down to the next support which is the 30dma, currently at 27.
LDK is not a stock trading on technicals right now. Instead, it is simply following the solar rally. The strength of that rally, and of the broader market is the real question here. You already know what we think about the broader market. Although we do not attempt to outright "time" the market, we cannot help but point out that the major indices broke support lines and moving averages on Friday. Actually, next week is pivotal, as it will likely set the tone for the market from now until next quarter's earnings season. If the earnings reports are acceptable, the market will remain bouyant for the next three months. If they are worse than expected, we will revisit Dow 11700, which will be viciously defended once again by the Fed and the PPT. The next three months, in that case, will be all about trying to keep the market afloat against all odds.
As for the solar rally, it remains intact. The recent pullback in shares of STP, ESLR, CSUN, SOLF, ASTI and DSTI are still within the limits of normal, healthy consolidative action. It is only once the solar stocks retrace more than half of their recent gains that we can say that another downleg has begun, and that call cannot be made yet.
If LDK does treat investors well in 2008 and 2009, it will have a lot more to do with its higher margins, completion of its poly plant, and higher eps numbers than its technicals. It will likely achieve most of its gains by gaps following its earnings reports. It's anyone's guess which earnings report will start the fireworks.
8 comments:
Thanks Snot
Thanks Snot. I'm posting this on yahoo mb.
thanks
Technical trend is clearly breaking out again, albeit sector or high demand specifically. Triple peaks are rare too. This is very bullish.
Looks like China is tanking hard. Its down 4% already and its only 11am there. FXP should show a massive gap up in the morning and whne you factor in Wachovia reporting results premarket on Monday after they announced over the weekend that they were moving it forward from Friday, in addition to DOW and S&P breaking resistance we could have a big down day on Monday. Ive calls on FXP and puts on Citi so they hsoudl show good reactions on Monday.
Secret,
Short Citi and long FXP this week is brilliant. Now if only you were long Ag, you'd have the trifecta:) Have you dabbled in Ag yet?
No, not yet. I was trading the steel names alright, but not the Ag. They are definatly one im watching though for the long term. Food shortages all over the world and India has banned exports of rice in order to feed thier own people. I just want to pick a company to go with and need to read up on them a bit more. I tell you i wasnt impressed with FXP this morning. china down 5.5% and FXp opens up 3%? On top of that it was a bad preformer on Friday when the Dow was down 230 points. I cut 50% of my holding i was so pissed at it! I'm beginning to think that the ultrashorts arent great for long term trades, but more for day to day short term ones. They dont react the way they should in the longer term. Ie a 30% drop in china wont equal a 60% rise in FXP. It could anywhere at all depending on if the drop in china came in a quick series of falls or a slow up and down.
Hi Folks,
Have read up on shorting but not sure how this works in practice.
I have an account with tdameritrade. I reckon that the shorting mechanism works as follows :
Select a stock one wishes to short;
select a price that you want to short to for eg. if the stock's current price is at $29, one puts in a lower price, say at $27;
If the stock's price goes to $27 or lower, the difference is profit and the broker credit it into your account;
If the stock's price goes above, say $30, and you close the trade at that price, the loss will be $1 per share and the broker deduct that from your account;
Triggers can be used to manage sell off at either end to manage the trade;
Also, there is "buy to cover" and "sell short" orders, what do they actually mean?
Your comments and advice will be much appreciated.
Desertfly
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