Name: Teva (Nasdaq: TEVA)
Last price: $65.60 on May 29 (Nasdaq).
Support to watch: $65
Resistance to watch: $67.50
Chart courtesy of Stockcharts.com
Teva is the bull that offsets the Tel Aviv Stock Exchange (TASE) bears. Teva has a weight of 9.5% in the Tel Aviv 25 index; when the TASE falls, a rise in the Teva stock can balance the loss. On Nasdaq, Teva naturally carries little weight, but its turnover is quite high and deserves mention.
The share’s sharp rise against the backdrop of a falling market deserves a technical analysis.
The conclusion of the analysis is that Teva is beneath a strong resistance level of $67.50.
This resistance level is horizontal, but it is also the result of a gently sloping negative trend. This means that it is conceivable that, in the short term at least, Teva will halt below $67.50. The analysis is based on daily closing figures.
A higher resolution picture shows the following:
At the end of last week’s trading on Friday, Teva tried and failed to rise above $67.50, confirming that level as an important resistance level.
Teva has an important and close support level of $65. Any movement below $65 will indicate the start of a downward correction. The first way-station of such a correction will be $62.50, and the second will be $60.
The trading strategy is therefore simple: Sell below $65 and buy above $67.50, with a hedge below that level. An existing long position will be hedged below $65, or will be sold, because holding the share between $65 and $67.50 is risky in light of its high price and resistance level of $67.50.
This review was written before the opening of Thursday’s trading in New York.
The above recommendations were made by a person/s working in the investment industry, who may hold positions in securities mentioned in the column. This column should not be taken as advice to buy, sell or continue to hold any securities, and anyone acting on the advice of this column does so at his or her own risk.
Published by Globes [online] - www.globes.co.il - on May 30, 2002