BKS – Barnes & Noble, Inc. – The bookseller company’s Point & Figure chart shows a trend reversal to the upside thanks to the main bearish trend line breakthrough at $20.25. Prices are also supported by a positive relative strength vs the market which makes it an outperformer. From the “high pole” at $33.50 prices declined sharply breaking the main bullish trend line at the end of September 08 and generating a triple bottom sell signal at $25.25 indicating that all long positions should be liquidated. The same high pole at $33.50 established and activated a downside target at $11.00 which was reached with an impressive accuracy in November 08. The sell off generated a powerful reaction forming a “low pole”, a pattern indicating a pause in the downtrend at least if not a turning point. Prices bounced off the $17.25 resistance several times before violating it with a multiple top buy signal in January 09. After the mini top at $20.00 prices started trading sideways in a range between $15.50 and $18.50. The key signals that changed the nature of the trend from bearish to bullish developed recently with the triple top buy signal at $18.75 first, followed by the double top buy signal at $20.25 which also coincided with the breaking of the main bearish resistance line. Prices are now pulling back after the up thrust and they will find support above the downtrend line eventually at $20.25 before resuming the uptrend. Long positions should be taken with first target at $29.75. On the downside lighten at first double bottom sell signal and close long positions at penetration of the main bullish support line.
CVX – Chevron Texaco Corporation – Shares of the energy provider failed to penetrate main bearish resistance line adding more weight to the bearish evidence. The price bounced off the line closing the week at $64.71 confirming the bearish trend is still in place. Since June 07 prices have traded sideways indicating distribution and setting up the top at $105.00 in May 08. The breakout of the main bullish support line in July 08 confirmed by the double bottom sell signal at $91.00 switched the trend from bullish to bearish and after a broadening formation around $85.00 resolved to the downside, a “long tail down” developed and brought prices to $55.50 fulfilling the predicted target at $56.50. The reaction from the lows that followed ran soon out of steam finding resistance at $81.50. Prices weakened again setting up lower highs at $78.00 and $75.00 followed by lower lows at $68.00 and $63.00. Recent failure to break the main bearish trend line and downside targets activated at $55.50, $46.00 and $39.00 leave no reasons to stay long. Long positions should be taken only with a double top buy signal at $70.00 which would also reverse the trend to the upside.
VNUS – VNUS Medical Technologies, Inc. – Provider of medical devices and procedures for the minimally invasive treatment of venous reflux disease, VNUS Medical Technologies has seen a nice reaction on its Point & Figure chart since the intermediate lows at $11.00 set in November 08. From the August 08 top at $24.25 prices weakened breaking the main bullish support line and the double bottom sell signal at $20.75 confirmed the changing of the overall status to bearish. The downtrend rolled out with a series of triple bottom sell signals at $19.50 first and then at $16.50 and $15.75 before the final sell off took prices at $11.00 just below the Point & Figure projected target at $11.50. The reaction from the lows formed a “low pole” pattern which signaled the turning point. The uptrend was resumed and the breaking on the upside of the main bearish resistance line at $15.50 reversed the trend to bullish status. Triple top buy signal at $17.00 at the beginning of February 09 followed by the recent multiple top buy signal at $20.50 added more weight to the bullish evidence. Relative strength vs the market is positive setting it as an outperformer. Long positions should be taken with short term target at $23.00 and then at $25.00. On the downside lighten at the double bottom sell signal at $18.75 and close all long positions at penetration of the main bullish support line.
Fabio Verdelli (CMT) is equity technical analyst at MV Portfolio Advisors. He has analyzed commodities and financial markets using technical analysis since 1998 and implemented technical analysis to develop trade ideas and assess risk. He is an expert on Point & Figure charting method and is currently publishing analysis on “Trend-online” financial website and Yahoo Finance Italy.Verdelli is a member of the Market Technician Association (MTA) and a member of the nominating committee within the MTA
MV Portfolio Advisors offers capital investment and risk management consulting. The firm provides equity research reports based on technical analysis featuring investment opportunities arising in the marketplace to help portfolio managers making timely trades.