01/31/00 Coca Cola Co (KO), Dell Computer
(DELL)
Points to watch: Coca
Cola and Dell Computer have both fallen to critical support levels.
Coca
Cola: KO has sold off sharply since it issued a less than robust
growth forecast earlier this month. The stock fell below both its 55-day
and 200-day moving averages on Thursday. The stock dropped 2.56 on
Friday to close at 56.94, its low for the day, bringing its loss for the
week to 9.94.
The stock is now
nearing important support at 55.63, the January 4th low and a level which
also provided support in October 1998. Additional downside support
is at 53.75, a level which provided resistance in October and acted as
support in September 1998 and September 1999. Technical indicators
continue to deteriorate: stochastics fell below 70 from short-term
overbought, and OBV has turned down sharply.
A
sell short signal would be given if the stock fails to hold support at
53.75, with a quick retest of the October 5th low of 47.31 then likely.
(See chart 1 below)
Dell
Computer: Dell crossed below its 200-day moving average on
1/25/00. DELL closed Friday at 37.25, just below important support
at 37.38-37.56 (the August and October lows). Technical indicators have
continued to deteriorate: daily MACD gave a sell signal on January
13th, daily RSI and stochastics hit new lows on Friday, and weekly
RSI and stochastics turned down sharply in early January.
A
sell short signal would be given on a break below Friday's intraday low of
37.06, with a retest of the June lows at 31.38 then likely.
Resistance is at 40.50-41, and 43.
