Daily PACS Nov. 22, 2011

Author’s additional notes:

It’s been four days since about market’s trend turned lower. During this time, speculative issues have become the stars of the show. I guess majority of traders have given up value investing to a more lucrative gambling style of trading. Even though the risks are high, it’s hard for an ordinary trader to resist the lure of having the chance to double or even triple his/her money in such short span of time. I find nothing wrong in this kind of casino type of trading. Just don’t forget that the odds are always stacked against the players placing the bet because the “House” will always have the edge. And like in any casino play, one has to know when to stop.

Yesterday, AAI which started the gap up plays failed close on ceiling price (50% up). It instead pulled back and closed lower than its opening price. To me, this kind of price action is a sign of momentum weakness. There is a chance that this can turn and develop into a full-blown correction (a move going down/profit taking) which could also affect other similar issues. As such, I am advising readers to stay away from speculative issues and to play it safe. If you bought speculative issues like  ICTV as what I have recommended yesterday or any other kind, consider taking your profits off the table.

I also warned yesterday regarding susceptibility of LC to profit taking because of its third day of ascent. Indeed we saw LC rose to a high of 1.48 (refer to resistance  posted below on LC’s chart Nov. 18, 2011) and pulled back. Today we will be watching if 1.38 (weakness pivot point) will be broken or not. If this level breaks down then we probably will see LC head lower and retest breakout point  found in between 1.30-1.33 levels.  This will become a crucial point in deciding whether to add or sell your position. I suggest to watch these areas carefully and to add or buy only on the way up after confirming that the areas mentioned (support of 1.30-1.33) have strongly held ground.

On our PACS list, one issue turned bearish yesterday which is BEL while  two turned bullish, PAL and EVER. SLI also seen to lose its breakout momentum if it continues to go lower than .76 level.

Lastly today, our biased will be towards the downside. But of course if we see some issues bucking the general trend, that means that the stock is exhibiting some form of strength and therefore will become a buy target suspect. Remember guys if the sells don’t sell, the buys will buy.

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*Please note that PACS’ price  alert level will always supersede any opinion coming from the author.

*Try not to chase stock and always buy near breakout point.