LINE (Friday's closing price - 24.88)

LINE has been on a strong up-trend since November when the stock made all-time lows at 10.81. One of the main reasons for the rally has been the strength in the energy market. Nonetheless, the stock this past week reached a level of resistance that is not only strong but that has been in existence since Dec07 and that has been tested successfully on one other occasion, making this a chart point that will be difficult to break.

In addition, with oil prices seemingly at levels where the downside is more probable than further upside, it seems likely that all energy companies will have a pause and a likely correction to the 10-month rally.

On a weekly closing basis, resistance is very strong between 24.99 and 25.11. Above that level there is minor resistance at 26.86. On a daily closing basis, resistance is very strong between 25.44 and 25.57. Above that level resistance is decent at 26.86. On a weekly closing basis, support is minor at 23.77, decent at 22.18, and very strong between 19.13 and 19.51 (5 previous low weekly closes as well as the 200-week MA. On a daily closing basis, support is minor 24.51, at 23.96, and again at the 50-day MA currently at 22.80. Below that, support is decent at 21.56 and strong at 21.02. Major support is found down at 18.66 where the 200-day MA is currently located.

LINE has not yet shown any signs that it is topping out but the resistance at these levels is very strong and with the stock having had such a major run over the past year, it is not likely these resistance levels will be broken without some type of correction occurring first. I do believe the biggest question is how much of a correction will occur, but not that it will occur.

On Friday, the stock did generate a new 15-month high at 25.13 but ended up closing in the red below the previous daily close at 24.95. It did not close below that level by enough points to say that no further upside will be seen, but the reversal pattern seems to show that the $25 level will be a tough nut to crack. In looking at the weekly charts, if the stock does get into a corrective phase, drops down to the mid 18's are probable, over a period of 1-3 months.

Sales of LINE between 24.96 and 25.44 and using a stop loss at 25.67 and having an objective of 18.70 will offer a risk/reward ratio of 9-1.

My rating on the trade is a 3.25 (on a scale of 1-5 with 5 being the highest probability).

My name is Tony and I am a chartist. I have been trading for close to 30 years. In the 80's I was a broker/trader/analyst for Merrill Lynch, Dean Witter, and Pru-Bache.

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