Comcast Fails At Resistance

11/12/08 08:55:59 AM

by Arthur Hill

Despite a big surge in late October, Comcast failed to break resistance and formed a big bearish engulfing pattern. In addition to affirming resistance, this candlestick pattern points to lower prices ahead.

Security: CMCSA
Position: Sell

Figure 1 shows Comcast (CMCSA) with daily candlesticks over the last four months. The stock broke support around 18 and broken support turned into resistance over the last few weeks. The advance back to broken support also retraced 50% to 62% of the prior decline. The retracement and broken support combined to mark a strong resistance area.

FIGURE 1: CMCSA, DAILY. The stock broke support around 18 and broken support turned into resistance.

Graphic provided by: TeleChart2007.

The stock formed a bearish engulfing pattern to further affirm resistance and momentum is rolling over. The bearish engulfing pattern forms when a long black candlestick completely engulfs the prior white candlestick. This black candlestick reflects a strong open and weak close. There was selling pressure the entire day. Further weakness the next day confirms the pattern. Note that the last candlestick is a work in progress as the market has yet to close. Momentum is also turning lower as the moving average convergence/divergence (MACD) (5-35) is poised to break below its signal line and move into negative territory.

FIGURE 2: CMCSA, MONTHLY. Where is the next support level or downside target?

Graphic provided by: TeleChart2007.

Figure 2 shows monthly prices to identify the next support level or downside target. First, note that Comcast broke a major support level over the last two months. In addition, the stock spiked below 13 in late October. The 2002 lows mark support around 11.5, and this is the next target zone. With the stock currently trading around 15.3, there is still room to fall. The bottom indicator windows show the MACD (5-35). Long-term momentum is bearish as this indicator is in negative territory and below its signal line.

Arthur Hill

Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.

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Comcast Fails At Resistance

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