It's been a long time since looked at the big picture monthly charts of the 30 components of the Dow Industrials. I've picked out a few that should be on a watchlist in case they start creeping up.
Yes, it's hard to imagine that the first stock up is EASTMAN KODAK. This is very interesting because it is now threatening to go back above the point of breakdown. If it can move up from here, I think buying might begin to creep in.
Here's something we never thought we would see HEWLETT-PACKARD look like this. I know we can make all sorts of arguments that this whole thing is a (bearish) rising wedge, but I think we have to draw that line just under $25 just in case this is a neckline of a head and shoulder's bottom.
I feel like an old-timer just brining up INTERNATIONAL PAPER. I mean, it's like talking about ol' Bessie (Bethlehem Steel), but the fact is that we have a big triangular congestion area here, so if it starts to go, it might be a good one.
This is a very tiny pennant on JP MORGAN CHASE after a big reversal. If this one starts to go, we need to be on the ball to get on board.
Even COCA COLA is looking like it can move to the upside. After making a higher swing low three months ago, we have upside potential here to the $50 area, where it will then test the downtrend line. A breakout would be the bonus.
This is a pennant, something that you would normally expect to resolve in the direction of the prevailing trend. In this case, SBC COMMUNICATIONS would be expected to resolve to the downside. The exception would be where a downtrend has been in place for eons such as this, where the surprise would be if it didn't, and therefore, shorts will cover while new buyers will show up if it can start creeping up.
Even the dreaded AT&T might be able to pull off a surprise. You can see that it's also a tiny pennant similar to SBC. We know the fundamentals are terrible, and that's why refusal to go lower, and slow creeping up would be a sign that it's time to nibble.
In the "stuck in a triangle" category is WAL-MART STORES. We don't know which way it's going to go, but I think the upside would be the surprise direction.
The other one that is stuck in a triangle is MICROSOFT. I'll be the first person to admit that it looks terrible, but of course, this means that the upside will definitely be a surprise.
I am now working on a list of Dow component stocks that look quite overdone, and may add a few more stocks to this list if I find anything new.
03.12.09 12:44 #