Could a bounce be brewing for HPQ stock?

It has been a two trading days since the massive dump HPQ took on Monday when it slid $3 on whopping volume. As the move digests, HPQ remains hanging around the $36 level, which corresponds to an area just below the 61.8% Fib retrace level (connecting March 2009 Lows with April 2010 Highs). Take a look at Figure 1 below.


Figure 1: Daily Chart of HPQ. Note the high volume dump and the subsequent trading around the $36 level. The Fib level is at roughly $36.70, which appears to have acted like an intraday upward resistance level. Of course, this is the upward level to break to consider a bounce. Inset, my Stockfinder Buy Signals. Chart generated using eSignal, inset panel generated in StockFinder 5.0.


We can now look at the 10-minute intraday chart. What we can see is that the 61.8% level at $36.70 has acted as intraday resistance. In particular, this price is where HPQ sold off today, having run up quickly at the open to this level. The stock gravitated back to test the $36 support level 2 more times, not successfully breaking it. We closed near the lows by the end of the day.

Figure 2: 10-minute chart of HPQ. Following Monday's sell-off, we have drifted sideways with decreasing intraday volatility. Note the $36 support level. Chart generated using eSignal.

Ideally, I would like to see the $36 level broken to pick this up for a long. However, I will be watching to see if the $36.70 level can be recaptured. A move higher to $36.50 would signal a probable retest of this apparent intraday resistance level. Upon doing this, we may expect a potential move up towards the $38 level. However, as I said, the stock will be really attractive for me if we can blow out the downward support level of $36.

 

Coincident Strength in the DOW 30 and S&P would be ideal to help HPQ bounce. I am not interested in taking the stock long just yet, however.

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