Grace Under Fire
Trying times test the character of
stocks as well as people. When news hurts a sector, I look for stocks within the
sector that are defying the downtrend or at least holding up against it.Â
Reacting to bearish analyst comments,
the market sold off Amazon Friday and slashed other e-tailers as well as other
Nets and techs. Cash ran for the blue chips. But I also see a number of techs
that held up while base-building. But first, let’s
appreciate the carnage in Amazon.com
(
AMZN |
Quote |
Chart |
News |
PowerRating).
The stock gapped down 8 1/8 to 33 7/8
to a new 52-week low on nearly eight times its usual trade. The move follows a
long downtrend from a Dec. 19 high of 113.Â
Shorts, watch this one. Amazon closed
near in the bottom half of the day’s trading range. There are no historic
support levels worth looking at, especially now that the market is again
reassessing Amazon’s business model. A pullback to the upside would be normal,
followed by a break to lower lows.
Now, as for those stocks with
character.Â
Broadcom
(
BRCM |
Quote |
Chart |
News |
PowerRating) is both an Internet and semiconductor play. The Irvine, Calif.-based company makes chips that provide broadband digital transmission of voice, video and data. Applications include digital cable set-top boxes, cable modems, high-speed office
networks and digital subscriber lines.
The stock gave up 3 7/16 to 165 1/16
on sub-par volume. Inconsequential. Look at the overall chart. The stock is
holding the new price range that it began forming after gapping up and clearing
its 50-day moving average on strong volume on Tuesday. Some sideways trading is
healthy.
The stock’s mid level is 183. I’d like
to see Broadcom clear that threshold before looking for pivot points or other
entry set-ups for the intermediate-term trade.
Further along in its right-side base
recovery is Broadcade Communications
(
BRCD |
Quote |
Chart |
News |
PowerRating), a leader in storage area
networks. The stock gave up 2 3/16 to 156 on below-average volume. The stock
pulled above its mid level on June 13 and has continued to build its recovery.
The stock could be in the process of
forming a handle in a cup-with-handle structure right now. Time will tell. The
pivot point would be the high of the handle, which at present is 169.
Â
Â