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Symantec Rising Off Bottom

08/29/06 03:42:12 PM
by Gary Grosschadl

After peaking past $33 in 2004, this stock suffered a decline to $14.70 this summer. Now things are starting to look up again.

Security:   SYMC
Position:   Buy

Several weeks ago, Symantec (SYMC) raised eyebrows with a volume surge approaching 150 million shares and a two-point gain in share price for the week. After a two-week consolidation, it broke above the ever-important 200-day moving average (MA). This set the stage for probable higher gains.

FIGURE 1: SYMANTEC, WEEKLY. This chart of SYMC shows upside promise.
Graphic provided by:
Several indicators are also considered on this weekly chart (Figure 1) to validate this surge above important overhead resistance. At the top of the chart, the average directional movement index (ADX) has started to upslope above the 20 level while the DIs (directional indexes) are bullishly poised. This suggests growing trend strength and a swing to bullish power. Below the chart we see positive divergence on the moving average convergence/divergence (MACD). As the share price drifted to new lows, this indicator was moving higher. This often points to a coming rise in prices. Finally, the relative strength index (RSI) or relative price index shows a move north of its often-key 50 area. This too hints at a change to bullish strength.

Fibonacci retracement levels are plotted using the high and low of the chart to muse upside targets. Three upside target areas are highlighted as they also relate well to previous areas of resistance. These areas are roughly $24, $26, and $33. Traders may anticipate trading targets or possible reversal levels at or near any of these levels. A close below the 200-day MA currently 18.50 would be bearish.

Gary Grosschadl

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

E-mail address:

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