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CHART ANALYSIS


Celestica Searching For Support

10/02/03 08:27:22 AM
by Gary Grosschadl

This well known tech stock trades on both sides of the border and is nearing what may be crucial support.

Security:   CLS (NYSE)
Position:   N/A

This daily chart suggests Celestica (CLS) is in a rising channel, however more trendline touches would make for a more convincing channel. Failure at the top of the channel occurred via a shooting star candlestick which was part of a larger pattern -- a head and shoulders top. Note the correct volume signature with lower volume at the head versus the formation of the left shoulder. The slanted neckline also matches the slope of the channel trendlines, giving some interesting symmetry.

I never like to see a stock move below its 200-period EMA, however in this case the stock is nearing likely support as shown on the chart. As there is a previous gap near the trendline, a bounce could occur. It may be prudent to watch the outcome before getting too bearish on the stock.

Celestica's daily chart shows an approaching test.
Graphic provided by: Stockcharts.com.
 
Several indicators also may be ready to turn bullish. The stochastics are in oversold territory and a move above the 20 area may signal an upleg beginning. Likewise the MACD (moving average convergence/divergence) hints at a possible turn developing soon. Note that traders were rewarded on prior occasions by waiting for a bullish crossover of the MACD lines.

A bounce soon would not be a surprise. Upside resistance will have to be monitored at the 200-period EMA as failure there could send the stock back down again. But success there brings the possibility of another test at the 20-day EMA, currently at $16.82.



Gary Grosschadl

Independent Canadian equities trader and technical analyst based in Peterborough
Ontario, Canada.

Website: www.whatsonsale.ca/financial.html
E-mail address: gwg7@sympatico.ca

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