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XM Satellite (XMSR) stock has considerable resistance around 13.60 from a number of technical items. First, broken support from the November lows turns into resistance. Second, the rally back above 13 retraced 62% of the prior decline. Third, the stock formed a bearish engulfing on February 19. These three items point to considerable resistance and the stock needs to take out the February 19th high to break this resistance area. |
In addition to resistance, the stock shows early signs of breaking down. XMSR broke the lower trendline of a rising wedge with a sharp decline last week. There was a bounce early this week, but trendline support turned into resistance as the stock declined sharply on February 27. This decline also occurred on high volume. I mentioned the bearish engulfing in the first paragraph and this pattern was confirmed with the trendline break. See Figure 1. |
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FIGURE 1: XMSR, DAILY. XM Satellite stock shows considerable resistance around 13.60. |
Graphic provided by: TeleChart2007. |
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The moving average convergence/divergence (MACD) confirms weakness with a signal line crossover. The bottom window shows the MACD with its signal line (nine-day exponential moving average [EMA]). The indicator held above its signal line the entire advance, and the break shows that upside momentum is seriously waning. The MACD is still in positive territory, however. A move into negative territory would likely coincide with an acceleration lower. |
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