Hanging Up Ericsson
Shares in Ericsson tumbled Friday
after the Swedish company warned that problems in its handset business would
pare down 3Q profits. The chart shows shareholders have taken a heavy
psychological blow. Time now to look for short entries.
Ericsson
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PowerRating) ADRs gapped
down to an open of 19 15/15, rallied to an session high of 20 7/16, then slumped
to close at 19 13/16, below the open and near the bottom of the day’s trading
range.
There are two possible short entries,
depending on how the stock behaves. If Ericsson shares head lower from here, the
pivot point would be a break below June 29 support at 18 9/16 (see black
arrow in chart). If the stock tries to pull higher, look for shares to stall
out and short as the share price undercuts the prior session low.
Of course, all stocks are speculative.
On any trade, set an initial stop where you will sell your new buy or cover your
short in the event the market turns against you.
Verizon Communications
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PowerRating)
defended its stock Friday, telling investors Q2 grew 15% and that earnings were
in line with estimates. Wall Street expects the telephone company, which was
recently formed by the combination of Bell Atlantic and GTE, to earn 77 cents a
share in the second quarter, according to First Call/Thomson Financial. A.G.
Edwards raised the stock to a “buy” from “accumulate.”
The stock, which entered a steep
downtrend on July 6, rebounded Friday, rising 3 3/4 on powerful volume. This
could be the start of a turnaround. But the intermediate-term momentum trader
should wait for the stock to clear its mid level as well as its 50-day moving
average before looking for entry points.