Friday, July 10, 2009

A Chart a Day #2: Fibonacci on ICE

Long time readers know ICE has always been want of my favorite stocks to watch. Yeah, the IPO was on my birthday but thats not why I like it so much. I like it because it moves. Well that and they seem to have a pretty solid business model, and I like a nice bedtime story to go with my charts.

ICE worked on a base for many months between $50 and $85 before breaking out early this year. It broke out and had sported a very nice, innocent looking, up channel for about six months until last Monday when.. WHAM! ICE lost 23% in two trading days. It simultaneously broke the up channel and lost it's upsloping 50 dma on well above average volume. CCI watchers were on there toes after it crossed zero last week, way to go guys. ICE seems to have found support at the top of the base ($85) which also turns out to be the 50% retrace of this year's rally.

Now if you ask me, I'd say ICE is not done dropping yet, in the near term. Today ICE closed below that key $85 level after holding it the past two days. Also, the 200 dma and the 62% fibonacci lie not too far below at $79.67 and $77.29 respectively. Given today's weakness and how obvious the $85 support is, I'd bet ICE sees at least $80 if not a few bucks lower before bouncing. After the bounce, bulls better re-take and hold $85 or the cracking ice just might melt.

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