The Technical Corner

09/29/2006 12:00 am EST


Jocelynn Drake

Financial Analyst, Schaeffer's Investment Research

Schaeffer analyst Jocelynn Drake takes a look—from a technical standpoint—at four stocks with recent news that has affected their share prices. In diverse industries including healthcare, transportation, and retail building supplies, these shares are on the move...


“American Railcar Industries (ARII NASDAQ) will sell 2,400 tank railcars to American Railcar Leasing, which is controlled by Carl Icahn, American Railcar Industries' chairman and principal shareholder. This new contract, together with other contracts for 2,000 railcars per year in each of 2008 and 2009, provides the company with sufficient backlog to fill the initial expected capacity of its new plant being built in Arkansas, through its first two years of operations. The stock has rallied more than 1%, but has been halted by its descending 80-day moving average, which it has not closed a session above since the beginning of June. A continued rejection at this trendline could result in a breakdown below support in the 26.50-27.50 region.


“AngioDynamics (ANGO NASDAQ) announced a first-quarter profit of $0.12 per share, beating estimates by two cents. The company also backed analysts' 2007 earnings outlook. The shares gapped higher on the news, taking out resistance in the 19 region, which had capped the stock since it gapped lower on August 11. It is also finding a layer of support at the 21 level, which marks the upper level of its August 11 gap. From a longer-term perspective, it is facing staunch resistance at its declining 20-week moving average, which has halted the equity's rally attempts since the beginning of June.


“UBS upgraded Lear (LEA NYSE) from "reduce" to "neutral," citing a 34% fall in the company's share price since May. The stock edged higher nearly 7% on the upgrade, but was halted by resistance at the 20 level. This region has served as support in the past and is now providing a layer of resistance. It is facing additional resistance at its declining ten-month moving average in the 22.50 area. Since May 2004, LEA has logged only two monthly closes above this trendline.


“Lowe's Companies (LOW NYSE) warned that it now expects fiscal 2006 per-share earnings at the lower end of its outlook of $2.00 to $2.07. The retailer added that revenue for the period is below its expectations. Surprisingly, the shares rallied after a weak start to the session and are currently hovering at breakeven despite the negative news. It is currently perched on support at its 50-month moving average, which halted LOW's pullback on a number of occasions since November 1995. The equity has overcome resistance at its 50-day moving average and is now using this trendline as support.“

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