Update 12/15: January Effect Candidates 2014/2015

By Rod David | December 15, 2014 - 6:39 am

AERO, ARNA, ATTBF, BTU, CALL, CARA CBIS, CDE, CLF, GBLX, GSK, NCT, OCN, PBR, RIG, SODA, WLT

Dec 8 January Effect update linked here.
Dec 1 January Effect update linked here.
Nov 17 January Effect candidates introduction linked here.
Oct 9 January Effect webinar linked here.

Join me in Monday morning”s Livestock to review each of the following issues in detail.

The premise with Energy sector stocks is that they had fully reflected their underlying commodity”s weakness — and then the underlying commodity accelerated its decline, taking the sector along for the ride. The extra drop isn”t so much unpredictable, as it is vulnerable, so long as resistance isn”t recovered. And resistance was never recovered.

Now the sector”s components have in most cases trended down to fresh lows. The underlying Crude Oil commodity has reached levels once again vulnerable to at least a steep corrective bounce, the first reversal from a new low cannot also be a durable recovery. If playing a bounce in the Energy sector, keep in mind that the first upleg will likely be retraced substantially.

Meanwhile, the more broadly-held issues became vulnerable to last week”s broader market weakness. If valid, strengthening among lower-profile candidates, and relative strength among others, should become more pronounced this week.

.		support	resistance	stop	target
AERO	Aerogrow International Inc.	3.43	4.60	3.27	7.40
	12/15: Narrow ranging repeated the prior week”s lack of action, which to some degree may be an underlying strength that is ignoring broader market and sector difficulties. Parameters unchanged.
ARNA	Arena Pharaceuticals Inc.	3.80	4.55	3.70	6.00
	12/15: Dipping into the week”s end might have been influenced by broader market weakness, but the volume pattern doesn”t suggest any new sponsorship motivating the dip. Parameters unchanged.
ATTBF	Abattis Bioceuticals Corp.	0.155	0.202	0.145	0.335
	12/15: Support has been thoroughly tested, if not too much so, but volume has only improved into bounces which suggests that any fresh relative high will find little resistance above. Parameters unchanged.
BTU	Peabody Energy Corp.	—	9.45	8.35	16.25
	12/15: Ongoing weakness in the energy sector has fueled a vicious cycle of justifying further tax loss selling. The new downleg is testing its maximum calculable support at 7.40, becoming vulnerable to at least a steep corrective bounce to resistance. Lowered parameters.
CALL	magicJack VocalTec Ltd.	—	8.45	7.50	12.25
	12/15: Volume isn”t expanding into fresh lows, but RSIs are diverging positively while 7.65 support is being tested. Lowered parameters.
CARA	Cara Therapeutics Inc.	9.55	10.20	9.35	15.75
	12/15: Narrow sideways ranging at recent highs is persisting for a second week, and should start breaking higher soon to avoid at least a corrective dip. Parameters unchanged.
CBIS	Cannabis Science, Inc.	—	0.077	0.055	0.125
	12/15: Still testing and holding .057 support, but a Descending Triangle pattern has meanwhile formed, which increases the risk to a deeper near-term dip regardless of the eventual resolution. Support removed.
CDE	Coeur Mining, Inc.	3.65	5.05	3.00	7.85
	12/15: Flat-to-higher ranging among Precious Metals has kept Miners elevated. Parameters unchanged.
CLF	Cliffs Natural Resources Inc.	5.85	8.80	8.00	16.20
	12/15: Further weakness throughout the week along with the underlying commodity is probing under prior lows. A corrective bounce is becoming likely, but an extended recovery would depend upon the character of that bounce. Parameters lowered.
GBLX	Growblox Sciences, Inc.	—	0.49	0.42	1.43
	12/15: Despite having avoided a fresh low for the week, a support parameter cannot yet be reinstated. But volume patterns do suggest that almost any high-volume uptick would attract wider sponsorship to extend higher intraday. Lowered parameters.
GSK	GlaxoSmithKline plc	—	44.00	42.60	50.60
	12/15: October”s recovery above $44 established a bottom, but its recovery has been retraced to attack the lows while volume expands sharply amid broader market weakness. A higher-volume recovery back above $44 may be the only way to prevent extending the trend down. Parameters lowered.
NCT	Newcastle Investment Corp.	4.55	5.05	4.80	6.20
	12/15: Volume expanded only modestly, if at all, into last week”s surge to fresh highs testing resistance. The recovery cannot tolerate much delay to exploiting the breakout and extending higher. Stop raised.
OCN	Ocwen Financial Corp.	20.75	24.50	18.90	27.50
	12/15: The ongoing range has narrowed, with volume trying to expand, but no new signal or pattern has formed. Parameters unchanged.
PBR	Petrobras	—	—	—	—
	12/15: Having extended the declne to new lows for a third consecutive week, any uptick in Crude Oil should easily trigger a 20-30% surge in the stock, but that will need to develop before assessing whether a durable low has formed. Parameters suspended.
RIG	Transocean Ltd.	—	—	—	—
	12/15: Still trending down to new lows, and still substantially underperforming an already week sector, making parameters doubtful to be reinstated.
SODA	SodaStream International Ltd.	19.50	22.45	19.20	28.05
	12/15: Starting the week with a low and its retest while RSIs diverged positively also kept up volume”s pace. Price firmed into week”s end while the broader market weakened. The relative outperformance should become more obvious by midweek if it is relevant. Parameters unchanged.
WLT	Walter Energy, Inc.	—	2.16	1.65	3.75
	12/15: Volume expanded sharply into firming prices before the week”s last session, which weakened on contracting volume. A fresh high above resistance would be credible for extending sharply higher near-term. Parameters lowered.

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