Monday, October 4, 2010

LO Watch

Lorillard Inc. (LO) has dropped sharply below the 20-day moving average with an intraday decline spanning 1.8%. I'm removing the stock from my watchlist.

LO $78.97

LO moved to bear phase on the major signals on Sept. 23. At that time I wrote that there were three conditions that might trigger re-entry as a bull play: 1) A move back above 1% from the 20-day moving average, 2) a decisive bull phase from the fast stochastic, or 3) a whipsaw back to bull phase on Person's Proprietary Signal.

Given the magnitude of today's move, those potentialities are off the table as practical expectations.

Even so, the stock remains in an uptrend, by the rules defining such. In order to call a downtrend, the stock must reach a lower low and then reverse from a lower high.

The lower low will be set if the stock moves below $75.22. The lower high will require a reversal below $83.03.

If LO should in fact reverse and pull above the 20-day moving average, with bullish signals flashing, then I would consider it for reentry. If it were to move above the swing high of $83.03, then the uptrend would be back in force and LO would regain its slot on the bullish watchlist.

Earnings will be released on Oct. 26 before the open.

Reversal Levels
  • $83.02, +5.2% (swing high)
  • $78.97 <== You are here.
  • $75.22, -4.8% (swing low)
Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.
  • pps - Person's Proprietary Signal.
  • psar - Parabolic Stop and Reverse
  • ma20 - 20-day moving average
  • ma200 - 200-day moving average
  • macd - Moving Average Convergence-Divergence
  • sto - Fast Stochastic
About the glance: The colors indicate the state of each signal.
  • trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways.
  • sto: green for bull, red for bear.
  • sto zone: green for overbought (80+), red for oversold (20-), yellow for neutral zone
  • psar, pps, macd: green for bull mode, red for bear.
  • macd trend: green for rising, yellow for sideways, red for falling.
  • neutral.
  • ma20, ma200: green for above the average by more than 1%, red for below the average by more than 1%, yellow for within 1% either side of the average.

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