Tuesday, June 19, 2007

Stock Chart: NYX (NYSE-Euronext) is in a downtrend? (June 19, 2007)

On June 6, 2007, this site analyzed the NYX (New York Stock Exchange-Euronext) Chart, and said that the NYX stock was in a holding pattern.

So how is it doing now?

Let us start with a 2.5 Year Chart:

Looking at this chart, we see that the NYX stock has been on a good 2.5 year uptrend. But if we draw a trend line (see note below on Trend Lines), we notice that the stock may have recently gone below the uptrend, though it has not done it with good volume.

Looking at the this time frame, we also notice that the Bollinger Band Width is under 10 (for this stock), a low value. Everytime the BB Width goes below Ten, we often have a move (either up or down). Some people would call this a volatility squeeze.

Now, the 10 month chart of NYX:

There is a lot of information on this chart, so let us examine each part.

The Negatives:

  1. NYX stock has gone below horizontal resistance of around $79.31.
  2. Once Support has been broken, Support becomes resistance.
  3. Stock is below both the 50 day and 200 day moving average.
  4. Based on the 2.5 year chart, the 2.5 year uptrend line may have been broken.
  5. Stock's 50 day moving average has gone down below the 200 day moving average, also known as the Death Cross.
  6. If you look to the left, you'll see the volume of stock activity by price. Around the $80-$88 range, we have a lot of congestion and lots of buying and selling. However, below that we see that buying and selling volume is much lower. Will buyers be supporting this stock at lower levels?
  7. If the stock continues to drift down, the stock will have difficulty moving up again because of all the overhead supply. Look at all the volume at the $80-$88 level and above. Investors who have held the stock at higher levels want to desperately sell the stock as it gets closer to their cost basis, pushing the stock down.
  8. Notice that from March 2007 to June 2007, we notice an inverse cup and handle, which is a bearish pattern.
  9. Since December 2006, the stock has formed a series of Lower Highs and Lower Lows, or in other words, the stock is in a 7 month downtrend.

The Positives:

  1. Stock has not gone down with good volume. However, stocks can still drift down without volume confirmation.
  2. In the lower window, we have a MACD (Moving Average Convergence/Divergence) indicator. There's a possibility that we may have some positive divergence with the NYX stock and the MACD indicator. The NYX stock has recently been going down, but the MACD indicator seems to be suggesting higher lows, a positive divergence.


So what do we make of the NYX Stock Chart? Many indicators would point to a breakdown in the stock. There are some positives we can look at but at this point, the negatives outweigh the positives.

From the sentiment perspective, there are many holders of the stock from $80 and above. Many investors may even be accumulating more shares at the $80 level. If the stock starts to trend downwards, there will be many investors who will be holding the stock at a loss. Their patience and conviction could be tested. If NYX continues to go downwards, many holders at higher levels will finally give up, and we will finally hit the bottom as former holders capitulate. This could then start a slow and arduous climb back up. But we are not at those levels yet.

Track NYX Stock Chart Now

2.5 Year Current Chart of NYX

Ten Month Current Chart of NYX

Note on Trend Lines:

Yes, give a chart to several chartists, and they may draw trend lines a bit differently. However, in the case above, the trend line looks correct, as the line is validated by seven different points along the line. The Trend line also nicely approximates the 200 day moving average.

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