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GAPS


Symantec Holds Strong

06/13/07 08:37:23 AM
by Arthur Hill

Despite pervasive market weakness in June, Symantec is holding strong, and this relative strength could foreshadow a consolidation breakout.

Security:   SYMC
Position:   Accumulate

On the daily chart (Figure 1), Symantec (SYMC) surged higher with a big gap in early May and broke above 20. The big gap is bullish and it is holding as buyers keep up the pressure. The stock then moved into a relatively tight consolidation bound by 19 and 20. There was a brief break above 20, but the stock fell back through. The late May low and 200-day moving average marked support at 19. A move below 19 would break consolidation support, and this would be negative. As long as the 19 level holds, I would expect further strength, and a break back above consolidation resistance at 20 would be bullish.

FIGURE 1: SYMC, DAILY. Symantec surged higher with a big gap in early May and broke above 20.
Graphic provided by: Telechart 2007.
 
Upside volume is starting to pick up. The early May surge occurred on big volume, further validating the move. Volume then tapered off during the consolidation, and this is normal as prices take a rest. Volume ticked back up the last two days, and buying interest is returning to the stock. Look for a volume surge to accompany and validate any breakout.

The bottom indicator is the price relative, which is Symantec divided by the Standard & Poor's 500. This ratio rises when SYMC outperforms the S&P 500 and falls when SYMC underperforms. The ratio surged in early May and held its gains. More important, the price relative moved higher the last few weeks and SYMC held up quite well during the June selloff. Relative strength is important in attracting institutional money, and continued relative strength bodes well for an upside breakout.



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.

Title: Editor
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E-mail address: arthurh@tdtrader.com

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