FLR Fails - CIEN Firms

Based on the November 16th close, Fluor (FLR) was featured after the stock bounced on good volume. Even though FLR was still in a downtrend, it was at retracement support and the bounce occurred on good volume. This bounce has now failed. First, follow through was weak the next two days. Second, FLR opened strong and closed weak on Monday. The S&P 500 was up over 1% on Monday, but FLR actually closed down on the day. This was a sign of weakness.

The third and final straw occurred on Tuesday when the stock closed weak on above average volume. The medium-term downtrend is proving too strong right now.

Based on the November 16th close, Ciena (CIEN) was also featured after a high volume wedge breakout. The stock followed through with a close above 14 on good volume the next day and then stalled for a few days. Ciena announced on Monday that it was buying some Nortel assets for $769 million. This caused the stock to gap down and close at 12. While the gap down and high volume decline are technically negative, it was news related and the stock managed to firm in the breakout zone. Moreover, CIEN bounced with good volume on Tuesday. There are now two levels to watch. First, a break below Monday's low would signal weakness and project lower prices ahead. Second, a break above 13 would fill the gap and show resilience.