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February 17, 2006


Given the vagaries swirling within options expirations Fridays, trying to form a useful opinion on the undercurrents of the day would be futile. Therefore, I leave you with a few charts to ponder for the weekend.

Is Fred rolling over? Successively lower RSI peaks with each higher stock peak would suggest trouble brewing.

stock chart

J.C. Penney leaped to a new high this week but failed to hold it. A weakening RSI tells us that this high was not achieved with the same enthusiasm as the last.

stock chart

Merck, on the other hand, has come off a classic double-bottom with vigor. While a near-term pull-back seems likely, and return to the lows does not.

stock chart

Circuit City's recent monster rally has left its MA in the dust. However, CC sports another example of a weakening RSI in the face of news highs, and volume has dried up during February's move.

stock chart

I occasionally like to pop in an RSI term at a factor of the cycle I use for the moving average. This exercise provide a slightly longer-term perspective. In the case of Intel, the stock peaked in early December within at declining RSI30 trend. Alarm bells should have been blaring.

stock chart

I'll catch up on the Q&A this weekend. Any questions I receive this evening can be included.

Disclosure: Short FRE, INTC; Long INTC Puts


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