The market's weak open today is in line with most of the interesting charts we've come across recently. Rather than resist the tide, it may just be easier to short the most bearish setups. Right now, those appear to be ON Semiconductor Corp. (NASDAQ:ONNN), Nephros, Inc. (OTC:NEPH), and XOMA Limited (NASDAQ:XOMA). It's not all gloom and doom though..... Medco Health Solutions Inc. (NYSE:MHS) looks like a legitimate bullish opportunity.

Actually, Nephros, Inc. (OTC:NEPH) shares haven't slipped fully into bearish mode yet, but they're hanging by a thread.

The chart below says it all. NEPH has found support at the $1.25 area since July. Over the last five days though, that support has been tested more than the rest of that time frame combined. If the attack persists, eventually, Nephros will indeed break under that level.

There's a slight chance the $1.04 could be support. That's not only where Nephros, Inc. shares found support in June, but it's also close to a major Fibonacci line. I don't see it as a significant support level for NEPH though; I've got a feeling this is going to be more of a head-and-shoulders kind of move.


To say that ON Semiconductor Corp. (NASDAQ:ONNN) is an understatement. It's been in a nasty downtrend since early September after making a perfect train track reversal pattern on the 11th. The question is, where will the stock land?

The good news and the bad news (and the reason we bring it up today) is to let you know that ON Semiconductor shares did NOT find support at their 38.2% Fibonacci retracement; the stock broke under that floor today. Therefore, the next likely stop for ONNN is $4.93, where the 61.8% retracement level lies. It could be worse.

The breakdown of the Fibonacci lines isn't one we'd test with ON Semiconductor Corp. The selling volume has been brisk during the whole pullback, and is actually still growing.


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It may be up today, but the damage is already done for XOMA Limited (NASDAQ:XOMA). The stock tumbled under a key support level last week, and we sent lower again after testing it today.

That line in the sand is $0.71, where XOMA Limited found support in June and July. After cracking a couple of moderately-important rising support lines in August and September, the last of them fell last week. Though we didn't plot it on the chart, the pullback from last week also pulled XOMA under the second of its key Fibonacci retracement lines.

Where to next? Great question. Unfortunately, the only real support level left for XOMA from here is the March low around $0.40. I'd trade it on a day-by-day basis though.


And finally, Medco Health Solutions Inc. (NYSE:MHS) is one of the few bright spots that may be worth latching onto at this time. A little good news on the earnings front (again) re-suggests the market is underestimating this company.

We're not going to rehash the news, as you can find it all over the web. We'd rather focus on an aspect of Medco Health Solutions that we don't get to mention very often - Fibonacci extension lines (as opposed to Fib retracement lines, which we've talked about ad nauseam of late). The premise is the same in both cases though.... we expect MHS to bounce around between levels that are in line with Fibonacci ratios (numbers ending on 0.62 or 0.38) of prior rallies or pullbacks.

Right now, a 61.8% extension of the pullback from $55 to $30 we saw last year from Medco Health Solutions shares means a target level of about $70 is fair. It could take a while for MHS to get there though. Personally, given the time requirement and minimal distance to our target, I'd use a longer-term call option to tap the trend.


If you'd like to know of any changes in our opinion of ONNN, MHS, NEPH,or XOMA (or if we officially recommend them as trades), be sure to sign up for our free newsletter today. It's delivered weekly.