Let’s Review Some Of My Recent Setups
I’ve mentioned a number of setups
over the last few columns and wanted to give an update on them as
well as implications of what has occurred specifically in
Zimmer
(
ZMH |
Quote |
Chart |
News |
PowerRating) and
Merck
(
MRK |
Quote |
Chart |
News |
PowerRating). We’ll also take a peek at a weekly chart of
Wal-Mart
(
WMT |
Quote |
Chart |
News |
PowerRating) and a column would not be
complete considering the surrounding events without a discussion on oil, and
more specifically the Oil Service HOLDRs
(
OIH |
Quote |
Chart |
News |
PowerRating).
First let’s review. I
recently mentioned that Zimmer
(
ZMH |
Quote |
Chart |
News |
PowerRating) had formed a Bearish Butterfly Pattern against a
price resistance zone. We received an initial move down out of those parameters,
but ZMH charged back with vengeance after announcing impressive earnings. First
of all, losses really bite! Can I get an “Amen� What they say about losses is
so true. Get used to losses. They are a part
of the business. Always will be.
That’s not my point here though. What has happened with ZMH has bullish
implications. A broken pattern and a resistance zone
that has been violated suggests that ZMH will likely continue on
the north-bound track. I’m not going to be a buyer right away.
What I will do now is be patient and wait for a pullback into a Fibonacci price
support zone. Ideally that pullback will be in the form of a pattern and hit
some time cycles.
Next,
we discussed a play on Merck
(
MRK |
Quote |
Chart |
News |
PowerRating) on the long side, based on a pattern and
price support. This one is playing out well for us and has actually hit my first
objective zone.
Now, let’s shift to some other
current observations. First, I see Wal-Mart
(
WMT |
Quote |
Chart |
News |
PowerRating) hitting major weekly resistance.
Below is the weekly chart. I would be taking profits and/or trailing stops on
long trades in this retailer at this point. If this resistance zone is violated
to the upside then I’d start looking for longs again. For me, for now, its time
to take some off the table and wait for another high probability set up in this
stock. In fact, this zone potentially represents a short opportunity.
Regardless, it is a major price decision.
Below is a daily chart of
Oil Service HOLDRs
(
OIH |
Quote |
Chart |
News |
PowerRating).
This ETF is hitting a Fibonacci resistance zone. In fact, it is a Triple Crown
short setup. A trade below Wednesday’s low would take me short with a stop
above 57.80. If it doesn’t go below Wednesday’s low, then no trade.
Finally, let’s take a look at
the 10 Year Treasury
(
TY03M |
Quote |
Chart |
News |
PowerRating). This futures contract has experienced a
significant sell off over the past 8 days, but it is hitting support and price
symmetry, as well as time cycles for a potential upside reversal. If that upside
reversal occurs it would likely have negative implications for equities. So at
least be aware of this chart.
Until next time,