Signs Of Tough Times Ahead

The US markets closed the Elections week with a tone of pessimism for the months to come. Over this week the markets recorded one of the worst two consecutive sessions since 1987, falling in two sessions more than 10%. The pessimism came to the investors’ mind again, after the giant Cisco (CSCO) revised down their forecasts, the first revenue drop in five years because of the financial crisis. In addition to this, the macro economic data are still not showing signs of stabilization in the employment and the consumer confidence, contributing to the decline in consumer spending.

The worsening economic situation is causing American businesses to reduce their labor force as a means of reducing costs. Many companies are also reducing their production since demand is lower, which contributes to the reduction of its workforce. Automakers and retailers are among the companies most affected by the collapse in consumer demand, but many others will follow if the problem persists. Signs of tough times ahead.

Chart courtesy of stockcharts ( click to enlarge )

Google (GOOG) - The near-term outlook is bearish. A drop to the $310-320 level appears likely. Remain invested with a stop loss at $325. Only a move past $342 would impart a positive short-trend. The stock overall is still weak as it is still trading below the major moving averages, so this is not yet the time to buy the stock.

Chart courtesy of stockcharts ( click to enlarge )

Qualcomm (QCOM) - The stock has been selling off rather sharply over the past 2 months but now looks like it has found support around the $32.97-$34 level. Technically the short-term trend is bearish. There is no compelling reason to take fresh long positions at current levels. A close above the downtrend line at $38 could be used to take fresh exposures. Existing holders could remain invested with a stop loss at $34.

Chart courtesy of stockcharts ( click to enlarge )

Fuel Systems Solutions (FSYS) - Shares surged 45% to $38.80 per share on Friday, going opposite way with most of other stocks. The price is forming a bttom reversal pattern which broke short-term resistance and the 200-day moving average which should result in a strong movement for the bulls. Technically, with K line back above D line and stock back above 200-day moving average we may see some rally coming.

Disclaimer: Trading stocks involves risk, this information should not be viewed as trading recommendations. The charts provided here are not meant for investment purposes and only serve as technical examples.

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