XING: Monthly Chart

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From last Sunday's entry:

"...as long as XING trades below the 10.08-10.00 bottom rung of resistance, it's bearish and the following downside targets are IN PLAY:
1. 8.82-8.994 (near-term support...the latter rises 0.029 each day)
2. 7.65-7.78 - (August - September lows)"

This week's low was 7.81, within three cents of the top end of Target #2 getting MADE, so that's close enough for a "possible" Double Bottom in the high 7's.

However, since we've still got three more downside targets IN PLAY, and since XING violated the up trendline this week in the monthly chart, we'll take a look at that chart.

In September, XING also violated the up trendline just slightly, which often occurs. That's known as a "shakeout," or a "Bear Trap." XING went on to put in a near-Bullish Engulfing candle in September, missing it only by three cents.

October, however, was a Bearish Doji Star that had two intra-month failures at the neckline of the 10-month H&S Top, and here in November, we're back to the bottom of the channel. The trendline comes in at 8.06, rising $0.12 each month. We want to see how XING handles both the trendline and 7.65 - 7.81 this week, going into the end of the month.

Chart #2 is the breakdown in XING below the 10-month H&S Top on July 17. A gap down opening like that is a fairly unmistakable sign that a stock has got technical problems, and when it doesn't recover quickly, that's good evidence. Sometimes, stocks will rally back to the breakdown, as XING did in late July when it rallied back to the broken neckline, but they don't always, and hanging onto a long position in those situations, hoping for a rally, can be risky business. "Bear markets descend on a cushion of hope."

Chart #3, SMSI, is an example of the latter: a gap down with no rally whatsoever. SMSI had broken below THREE patterns in October, and spent the remainder of the month attempting to recover. On November 1, SMSI gapped down below the June low of 11.91, to 11.88, putting an entire year's worth of longs under water. The high on the day was a "show no mercy" 11.90, exactly one penny below the June low, not allowing any of the longs to get out for a break even.

Charts #2 and #3 are examples of what we want to watch for if XING hasn't put in a Double Bottom here, so that we aren't caught like deer staring into the headlights when we need to be taking action.

XING: Responses To The Fundamentals

XING's recent negative RESPONSES to "Good News:"

1. October 26 earnings - Response: Gap To Crap Bull Trap at 10-month neckline resistance.
2. November 2 Big Buyer at 11.80 - Response: Failure just below 10.80 resistance
3. November 6 Dutton Report - Response: DOUBLE failure at 10.80 resistance
4. November 14 H1 Report - Response: Rally from 9.95, above 10.00 - 10.08 resistance, then a give back of almost all of that entire gain. Yesterday's close was 10.03, only eight cents higher than where XING stood prior to the release of H1.

5. November 16 QXM earnings: Response: Failure to complete the Right Shoulder of a "possible' Bullish Inverse H&S pattern, and a breakdown below the 10.08-10.00 bottom rung of resistance.

If XING can't regain that bottom rung of resistance, next support is the up trendline off the September 14 low, which comes in on November 19 at 8.994, then 8.82, which was the November 9 low. That's important support here because as long as XING trades below the 10.08-10.00 bottom rung of resistance, it's bearish and the following downside targets are IN PLAY:

1. 8.82-8.994 (near-term support...the latter rises 0.029 each day)

2. 7.65-7.78 - (August - September lows)

3. 6.67 - measured move off the November 8 breakdown below 10.08-10.00 trendline

4. 6.53 - measured move off the Halloween close below the October 5 trendline

5. 4.11 - July 17 Crash target

XING: Ahead of QXM's Earnings

XING's recent negative RESPONSES to "Good News:"

1. October 26 earnings - Response: Gap To Crap Bull Trap at 10-month neckline resistance.

2. November 2 Big Buyer at 11.80 - Response: Failure just below 10.80 resistance

3. November 6 Dutton Report - DOUBLE failure at 10.80 resistance

4. November 14 H1 Report - Rally from 9.95, above 10.00 - 10.08 resistance, then a give back of almost all of that entire gain. Yesterday's close was 10.03, only eight cents higher than where XING stood prior to the release of H1.

Included in the RESPONSE to XING's release of H1, however, was the 10.03 close, which was a close above the 10.08 - 10.00 neckline of the 7-week Head & Shoulders Top (blue circles), so if XING can hold here and rally, the stage is set to turn this around to the upside by completing the Right Shoulder of a Bullish Inverse H&S pattern (green circles), and by taking out the 10.80-10.69 neckline to the upside.

That would spring the BEAR TRAP that has been set. Those who sold and/or shorted the November 8 breakdown, and especially those who sold and/or shorted the two little Bullish Hammers on November 9 and 12 (the Head of the pattern) would be "trapped" if XING can successfully break out to the upside.

The breakout doesn't need to occur today, on QXM's earnings. Realistically, everyone who bought XING recently, prior to the November 8 breakdown, is a trapped Bull. All of them paid a higher price than the current 10.03, so many of them will be sellers on any rally. But, if XING can hold this neckline, complete the Right Shoulder and break out above 10.80 - 10.69 in the coming days, that overhead supply of sellers can be worked through.

Otherwise, XING likely is headed for at least a retest of the recent 8.82 low.

XING: Possible Bullish Inverse H&S Pattern

From November 9 post:

"On any rally, we've now got "stacked resistance" at:
1. 9.98-10.08
2. 10.80"

XING managed to rally well into resistance yesterday and now has a chance of a Bullish Inverse H&S breakout on/after QXM earnings if it can form a Right Shoulder here and knock out the down sloping 10.80-10.69 neckline.

The Head of the pattern is the Ascending Triangle that we discussed in the post below. It's 10.06 target got MADE, so that's constructively bullish. XING is selling off quite a bit today, but it's holding near the 9.98-10.08 bottom rung of resistance, trying to establish "former resistance as support." That's also a positive. Today's selloff is on low volume. Another positive.

XING: Ascending Triangle Breakout To Resistance

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In the first chart, we can see that short-term, XING had an Ascending Triangle breakout late yesterday morning that put a target of 10.06 IN PLAY, right in the 9.98-10.08 resistance area, basis the daily chart.

Math for the Ascending Triangle:

9.44 - high (the more conservative of the 9.46 and 9.44 highs)
8.82 - low if the pattern
9.44 - 8.82 = 0.62 points added back to 9.44 = Target: 10.06 IN PLAY

The stock closed yesterday at 9.95, right below the 10.08 - 10.00 down-sloping trendline (currently at 9.98) of the six week top in the daily chart, and XING now is at the bottom rung of stacked resistance.

Yesterday was the first bullish move in XING since the (1) earnings, (2) $11.80 stock purchase and (3) Dutton disasters. All three fundamental events were Bull Traps.

Any CLOSE above this first level of resistance is reason to give the Bears pause instead of paws :)

The latter will depend on the quality of any further rally here. Shorts likely will use the following initial resistance levels to cover:
1. 9.99 - 10.08 (the nearly horizontal trendline)
2. 10.23 - 10.27 (the November 6 Dutton "sell pivot" and the 50 DMA, respectively)
3. 10.81 ( TWICE validated resistance following the Dutton report).

XING - More Technical Difficulties

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After the July Crash, XING turned short-term bullish on September 20 when it took out the 9.98 pivot of a "W"-Bottom (or, Double Bottom), followed through to the upside the next day, and continued higher.

On the first pullback from 11.94, we would expect 9.98 to be support.

"Former resistance 'should be' support."

It was. The October 5 low was 10.08. After the October 26 earnings "Gap To Crap" Reversal, we had several levels of "possible support," but none of them held, so we again were looking for 9.98 - 10.08 support to hold.

November 5, XING put in a low of 10.00, so the 9.98 area was support again, as it "should have been."

November 8, however, after putting in an early morning high of 10.25, just below the 50-day moving average at 10.26, XING broke that key 9.98 - 10.08 support level to the downside.

On any rally, we've now got "stacked resistance" at:

1. 9.98-10.08

2. 10.80

3. 11.09 (the red up trendline, coming off the October 5 low of 10.08. It rises daily.)

4. 11.50

5. 11.94-11.97

XING: Responses To "Good News"

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From my October 30th post, "Responses To Dutton's Calls:"

"The ONLY thing about the fundamentals that is important to me, is the market's RESPONSE to them. Earnings. Upgrades and Downgrades. News items.

Will Dutton's "Speculative" Strong Buy reiteration of October 29 at least get XING rallying back to 11.50 resistance, which is the bottom of the 11.50-11.97 "neutral zone?" Will the reiteration help XING get back inside that neutral zone? Will it help XING get back above 12.00?
That's what I'll be watching for . The market's RESPONSE to the reiteration."

On October 31, XING closed below DOUBLE support: (1) the yellow up trendline off the 10.08 low, which was a VALIDATED trendline (see Yellow #5); and, (2) the white trendline, which was horizontal support in the low 10/80s.

November 2, there was news about the sale of stock, at 11.80, to a big buyer. What was the market's RESPONSE to that "good news?" A "Bull Trap" rally to resistance, at White #1, then a drop to 10.00.

At the beginning of this week, the market anticipated the Dutton Report, and again rallied XING to resistance, at White #2. When the Dutton Report came out on November 6, the market's RESPONSE to the report was to rally XING to White #3, for a VALIDATION of that trendline as resistance, and to rally XING again on Wednesday morning, to White #4 for a SECOND VALIDATION of that trendline as resistance.

Remember now, we knew on October 31 that XING had broken below DOUBLE SUPPORT, ahead of "good news" on the fundamentals, on November 2 and November 6. Sometimes the fundamentals are good enough to trump the technicals, but in these two cases, the technicals not only are trumping the fundamentals, the technicals have given us two confirmations of that fact by validating resistance TWICE, at White #3 and White #4.

In order for XING to stop being bearish, it needs to take out that white trendline (White #1 through White #4), which would put the stock in a neutral zone, below next resistance at 11.35 (the October 30 failed attempt to get to 11.50 resistance), and then resistance at 11.50-11.97 (the "old neutral zone").

VPHM: Since Earnings

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From October 20, 2007 post: "VPHM: Hanging On By A Thread"

"Normally, I try to stay with a trade until I'm stopped out, and I wasn't stopped out on this one, but given the strength of Friday's smackdown in the general market, the fact that VPHM is in Crash Recovery, and the fact that this isn't a particularly strong pattern, I decided that "discretion is the better part of valor," and cashed it in for a very small winning trade (1.8%)."

Sometimes those "safety plays" pay off, as this one did.

VPHM gapped down below the weak Symmetrical Triangle at the release of earnings, and yesterday afternoon, the 7.51 target MADE without any snapback rally after the breakdown.

This morning, VPHM took out 7.51 to the downside, which was a "possible" Double Bottom with the August 10 Exhaustion Gap low of 7.51, so it's at a new 16-month low, looking for a bottom.

QXM: Ascending Triangle Breakdown

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QXM broke out of an Ascending Triangle to the downside on October 29, putting a target of 9.80 IN PLAY.

Math:

12.36 - (The more conservative of the 12.36 - 12-40 highs)

10.44 - The low of the pattern

12.36 - 10.44 = 1.92 points, subtracted from 11.72, the point of the breakdown =

Target: 9.80 IN PLAY

This morning's low thus far is 9.85, within range of the target. QXM has recovered back above 10.00, indicating that a low "could be" in.

XING: Double Break Of Support

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The yellow trendline off the early October low was validated by a successful retest, where the arrow is. At the same time, XING established horizontal support, in the low 10.80s.

The rally to 11.50 resistance that ensued got only to 11.35, then this, BOTH trendlines broke to the downside.

ACOR: Possible Inverse H&S Forming

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After the September 26 breakout of the Bullish Wolfe Wave, ACOR immediately retested the breakout, which was successful, then made a dead run for the target line, at Green #6. It fell shy of achieving it, but in doing so, it established a second data point (21.73) for a "pattern morph" (change) into a possible Bullish Inverse Head & Shoulders (blue circles).

The neckline (21.41-21.73) has an upward slope. There are several different ways to measure the pattern, to derive a target if it breaks out. I always use the most conservative measurement of the choices, so that I don't overestimate, and we're just try to "ballpark" what we're aiming for anyway (it ain't rocket science).

Math:

21.41 - (the more conservative of the 21.41 and 21.73 data points)

15.80 - low of the Head

21.41 - 15.80 = 5.61 points

5.61 added back to 21.41 = a target of 27.02 IN PLAY, if it breaks out.

No guarantees, of course, but these patterns can be very powerful. Two other stocks that I discussed earlier this month, ASPV and QXM both broke out of this pattern, and both of their targets got MADE in a short time.

SILC: Trick....or Treat?

Annie,

After the September 4 Breakaway Gap, the first target of 26.74, which was a return to the high of the Big Symmetrical Triangle (in black) got MADE very quickly, and was exceeded, confirming the breakout was, indeed, bullish.

"Take at least 'some' profits when targets get MADE."

On September 20 SILC nailed a successful retest of the Symmetrical Triangle on a Bullish Hammer candle. Retests of breakouts are to be expected, especially after any target gets MADE, and at that point, SILC was looking like a champ, and there was every reason to think that the next target of 32.79 also would get MADE. Until....

As you will remember, stocks often trade in "fractals," or "patterns that repeat," like XING in January, 2007. The Symmetrical Triangle in blue in this chart is a much smaller version "or, fractal" of the one in black. Symmetrical Triangle patterns are "continuation patterns," so we expect them to breakout and continue in the direction of the trend, as SILC did on the September 4 Breakway Gap. The chart was VERY bullish, and the breakout was to the upside.

But, be careful when "continuation patterns" DON'T breakout in the direction of the trend and go the other way, because that's a strong sign of a reversal in the trend. SILC broke down out of the Symmetrical Triangle (in blue), and when that occurred on October 22, the stock not only came under some selling pressure, it went into serious technical failure.

I haven't heard of this stock until you asked about it this morning, so I don't know "the reason" for the October 22 smackdown, but as you know, I always say look at the stock's REACTION to earnings, analysts' upgrades and downgrades, news releases, etc.

I'll guess that SILC released earnings that "disappointed" because it has enjoyed a spectacular gain of 600%+ in just over a year, so a case of "Buy the rumor...Sell the news."

But, whatever "the reason " for the selloff was if you know of one, this also was going on, technically:

1. The Symmetrical Triangle "fractal' (in blue) broke to the downside, and it "shouldn't have." It "should have" resolved in the direction of the trend, and by breaking DOWN, it was giving a strong indication of a trend reversal.

2. That breakdown put a target of 17.28 IN PLAY.

Math: Subtract the low of the pattern from the high (6.01 points), then subtract that answer from the data point along the lower trendline (23.29) to derive your target.

3. Remember the successful retest of the top of the Symmetrical Triangle, at 22.23, on September 20? That also got broken to the downside, and it "shouldn't have." The work of establishing technical support there already was completed, and when it WASN'T support any longer, on October 22, that brought in more "technical selling" from the players who were using it as their "stop loss."

4. After that broke, next support was another retest of the top of the Symmetrical Triangle, which came in on October 22 at about 21.68. When players saw THAT wasn't support either, and that SILC was going back inside the BIG Symmetrical Triangle, many of them threw in. And, as SILC went farther down into the Symmetrical Triangle, more selling. UGH. The 17.28 target IN PLAY nearly got MADE in one day!

October 23, the bottom of the Big Symmetrical triangle came in at 17.24, and SILC nailed that trendline EXACTLY. The low on the day was 17.24, and SILC finished the day on a Bullish Hammer, giving longs a chance to breathe a sigh of relief!

When a stock retests a trendline and holds it, that's called a "trendline validation." The market is telling us, "Yes, that IS support." Many technical players will put in their orders to buy right there, or a penny or three above it.

A validated trendline becomes important because, if later on the market tells us, "That no longer is support," that's an "uh-oh..." How much of an "uh-oh" depends a lot on the length of time that trendline has existed. In this case it has existed since June, and it's part of a pattern that has existed since April. If it gets broken to the downside, everyone who is holding long ABOVE that trendline is holding the stock at a loss, and in this case, it's of 7-months' duration.

October 29, SILC violated the "validated trendline" on an intraday basis, but closed the session out back above the trendline, on a "hopeful-looking" Bullish Hammer.

"Bear markets descend on a cushion of hope." At yesterday's close, SILC broke below the BIG Symmetrical Triangle, puttting a downside target of 7.54 IN PLAY (the height of the pattern, subtracted from the point of the breakdow).

As we know, targets don't always get MADE. They only are what the measurement of the pattern added to or subtracted from the breakout or breakdown suggest. But, we also know that 7-months worth of longs who purchased the stock and who haven't sold, now are trapped above the trendline with a loss, and that they now represent "overhead resistance."

The October 30 breakdown "could be" a Bear Trap, and if it is SILC "should" get back above that broken trendline VERY quickly, because players who hold the stock and who allow for that possiblity will become weak-kneed if they see much more downside in the stock.

Best of luck to you with this one, Annie!

XING: Responses To Dutton's Calls

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Dutton upgraded of XING on January 16, 2007. The market's response was to break the stock out of a QUADRUPLE nested bullish pattern, and send it on its way to both the FOUR technical targets that were IN PLAY, as well as to Dutton's 20.23 target. On the first chart, January 16 is the big white candle. That upgrade was during trading, and XING soared immediately when the upgrade came out.

Dutton reiterated their Strong Buy on February 14. XING closed at 18.20. The market's response was to rally the stock for only six more days, to the 2007 top of 19.94, just below Dutton's 20.23 target.

Dutton not only wasted a bullet on that call since XING was doing fine in the rally that already was in progress from their first call, investors who bought XING at 18.20 on the recommendation can't be very happy knowing that they bought it about six days before THE TOP, for 2007. OUCH!!

Dutton reiterated their Strong Buy on June 4 after XING broke down out of the Bearish Rising Wedge, and MADE both targets that were IN PLAY: 14.52 and 12.77. XING, on June 4, was at 12.43 (the candle at the far left on the second chart).

Dutton lost a tremendous amount of credibility right there, with that June 4 call. Investors who bought XING at 18.20 on February 14 have to be thinking, "WHAT?? It sure wasn't a Strong Buy when I bought it at 18.20! XING is down 31% from there, and now you're going to reiterate your Strong Buy?"

Dutton reiterated the Strong Buy again on August 21, with XING closing at 9.74, down 46.5% from their February 14 reiteration, and down 27.6% from their June 4 reiteration. Now, what are investors who bought those two Strong Buy reiterations saying?

$##$%$%

And, when XING finally hit bottom at 7.65 on September 14, 2007

The February 14 investors are down 58%

The June 4 investors are down 38.5%

The August 21 investors are down 21.5%

How credible were Dutton's Strong Buy reiterations with any of those investors? XING has recovered, as we know, but we certainly can't give attribution for that to Dutton. XING stumbled badly after their last Strong Buy reiteration, and didn't begin to rally until 3 weeks after their call.

The ONLY thing about the fundamentals that is important to me, is the market's RESPONSE to them. Earnings. Upgrades and Downgrades. News items.

Will Dutton's "Speculative" Strong Buy reiteration of October 29 at least get XING rallying back to 11.50 resistance, which is the bottom of the 11.50-11.97 "neutral zone?" Will the reiteration help XING get back inside that neutral zone? Will it help XING get back above 12.00?

That's what I'll be watching for . The market's RESPONSE to the reiteration.

And, by the way, with XING at something like a P/E of 5 basis 2008 earnings, my read on the "Speculative" insertion to the Strong Buy reiteration is that there is "risk/speculation" that XING could be a "value trap" at this ridiculously low P/E, meaning that if XING management can't get their act together and the stock tanks as a result, investors are "trapped" because they bought the stock, thinking that it was a "value" play.

XING already has been a "value trap" for investors who bought it at much higher prices, in the 10-month Head & Shoulders Top.

TIE: Inverse Head & Shoulders Breakout

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Friday's Inverse H&S breakout was on a Breakaway Gap, and on heavy volume: 14 million shares. A target of 44.17 is IN PLAY. Target date: by January 25, 2008, but no later than March 25, 2008.

VPHM: Ahead Of Earnings

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My pre-market comment, on the Yahoo XING Message Board, after XING released earnings Friday morning:

26-Oct-07 09:04 am

"I'm very glad to see these good earnings finally come out. Today, it's important to see how the market REACTS to the good earnings, i.e., we don't want to see any "Gap To Crap," and a slide all the way back to UNCH, like we did on the October 11 rally."

Result: XING had a horrible "Gap To Crap" opening at 10-month H&S Top neckline resistance, got to 13.00, then slid for remainder of the day, closing at 11.27, down 13.3% off the early morning "Gap To Crap" high. UGH...

Going into this week's earnings, VPHM is positioned similarly to how XING was, technically.

In the first chart, we can see that the dominant feature is the 5 1/2 month wedge (in purple), out of which VPHM crashed in July. During the 2 1/2 month Crash Recovery process, VPHM has formed a weak Symmetrical Triangle pattern (in blue).

It's weak because:

1. The chart is bearish, and Symmetrical Triangles "usually" are continuation patterns that get resolved in the direction of the trend, unless it's a reversal pattern.

Well, there's the rub! We don't know that yet because the pattern hasn't been resolved. If patterns were ALWAYS bearish or bullish, the stock market would be a "no brainer," and we know that it isn't. So, we have to watch this pattern and see, but be mindful of the fact that the trend is DOWN, and that any rally is a rally into RESISTANCE.

2. TWICE, VPHM has validated the bottom of the pattern (in blue), but also TWICE, VPHM has violated the lower trendline on an intraday basis, showing weakness.

3. It's a 2 1/2-month pattern that is "possibly" bullish, but it's going up against a 5-month pattern that we know was bearish. "Ye old supply and demand." VPHM, if it breaks out to the upside, has to rally into that 5-months' worth of overhead supply. Longs are trapped in the Wedge (purple), and many of them WANT OUT on the next rally. Not all of them, of course, and some of them already got out in The Crash, or since then, but a lot of them will want to sell any decent rally that gets them out whole, or at a more acceptable loss.

With that in mind, if VPHM can come out with good earnings, and is indicated higher in pre-market, what would we look for?

Naturally, we'd want to get a quick idea of "how good" the earnings are. Did they absolutely blow away numbers, and give very good forward guidance, etc.? If they did, and VPHM has some OUTSTANDING pre-market indication, like BID: 14.50...ASK 14.55, that would be near Purple #5 in the first chart, well into resistance, and players trapped in the wedge might be less inclined to sell, and might be willing to hold longer-term, if the market REACTION to earnings is good. "Some selling" of a gap opening would be normal working through of the resistance, but we wouldn't want to see what I described Friday morning in XING as a slow-w-w blood-letting, steady decline in the stock. UGH...

Looking at the second chart, if VPHM "just beats," .... nothing great, but is indicated higher, I'd immediately be suspicious of a "Gap To Crap" opening that might fail, because of the overhead resistance. If those trapped in the Wedge see VPHM start to slide immediately from the open, many of them likely will get panicky, and want out. Shorts who covered ahead of earnings will be invited back in, especially if it's a "Gap To Crap" to some resistance level that they're watching. Short-term players who buy the opening "Gap To Crap" quickly will realize that they've bought a pig in a poke, and will panic out of it, as well.

Levels to watch for a possible "Gap To Crap" opening:

11.18 (as of today...could change by earnings): That's the top of the Kumo (cloud) basis the Ichimoku Kinko Hyo chart. VPHM failed there exactly, at 14.85, on August 2 on the Bull Trap upside fakeout (see first chart).

11.644 - If we create a parallel line with a slope of 0.03125, identical to the slope of the bottom of the Symmetrical Triangle, it will come in on November 2 right there. A failure at, or near there, would give a strong suggestion that the Symmetrical Triangle has "morphed" (changed) into a Rising Channel, and those also "tend to be" bearish. Not ALWAYS. There were two of those in GIGM recently. BOTH resolved to the upside. Watch for signs of failure there, though.

12.20-12.25 - The extended Wedge trendlines

12.45 - Was the Bear Trap fakeout low, prior to the CRASH. That's the beginning of Wedge resistance, in terms of price.

Message To Oliver (laonda): If you happen to read this, I'd greatly appreciate it if you would link my blog to the Yahoo VPHM Board. I've been getting that danged "Error Message #999" since yesterday morning, and have been unable to post this in case anyone wants to look at it ahead of earnings. Thanks in advance, and best of luck to you if you're in VPHM!