Sunday, December 9, 2007

FXI, CHL, XING: Bull or Bear Trap?



















(Click On Charts To Enlarge)








All 3 had bullish breakouts last week, and all 3 closed back below their respective breakouts on Friday, so as the charts stand, they look like "Bull Traps:" anyone who bought the breakouts is under water on the trade, and at least momentarity is "trapped" at higher prices.








Anyone who shorted the breakouts has a gain. However, all 3 of these charts have a very decent chance of reversing higher next week, back above their breakouts, in which case Friday's bearish closes in all 3 stocks will end up being "Bear Traps."








I say that because the technicals look very decent here. See the FXI chart of the sequential Fibonacci measures of relative strength, and comment on the MACD. The RSIs and MACD in CHL and XING look similar to FXI's, although XING's MACD still is well below zero.








The 50DMA in CHL is 89.956 and the "last low" in CHL, just prior to the "W"-Bottom breakout, was 89.35. I shouldn't like to see that low get taken out to the downside.








FXI has a gap (see chart) that might get filled, but the 80.00 low of the Right Shoulder "shouldn't" get taken down. That's a serious technical flaw, if that should occur.








The charts of FXI and CHL are much more bullish than that of XING, which is short and intermediate-term bearish, but XING could benefit if the former two can get back above their respective breakout levels next week.








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