First of all Happy New Year to all of you!
The index, from the first look, seems as if it is forming an inverse head-and-shoulder formation, which is something that I was hoping for last year, but from the last trading day of 2010, it somehow does not support this case. Last trading day for 2010 saw the index form a black candle with relatively large volume, which is not a good sign. The large volume on the last trading day would have complemented the inverse head-and-shoulder formation if it was a white candle. A black candle means there is doubt on whether the upward movement can still be sustained. Although still do watch out for the neckline near the level of 4235. If a break out happens, then we do have a successful inverse head-and-shoulder. Otherwise, we may see the index moving sideways to downward for the coming week. I am more inclined to think that this will be a sideways to downward movement for the earlier reason that there was a large volume on the black candle of last trading day. But even though the inverse head-and-shoulder does not push through, the index may be forming an ascending triangle formation if the resistance holds, which is what I think would most likely to occur.
MPI seems to have broken out of an inverse head-and-shoulder formation. The breakout day had a very large volume and long spread. Target price for the formation is at 4.20. Resistance is at 4.44 which is the previous high. Support is at 3.76 which is near the neckline of the inverse head and shoulder.
MER looks as if it has broken out of an inverse head-and-shoulder formation, but technically, connecting the neckline does not show a breakout from the neckline. The breakout is more of a break out from a triangle. The good thing about the breakout is that it was not just a breakout from a triangle, it was also a breakout of the channel that existed since early 2010. The first time the channel was broken was last Sep 2010, but the stock went back inside the channel by Nov. This recent activity of once again breaking above the channel puts the stock in a bullish position once again. The target price for the breakout of the triangle is near 250, but upcoming resistance is at 236, which is the previous high. A little bit of caution though as the successive gap up for the past 3 trading days might result into exhaustion, just be on the look out for a reversal indicators (island reversal or hammer formation) near the resistance of 236.
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