Price retracement for Entergy would offer buying opportunity

ETR -- NYSE: $85.88 (U.S.)

Following a multiyear base-building period (not shown), Entergy Corp. started a sharp up-leg that reached $79.22 in mid-2005 (A). The stock first settled into a nine-month horizontal trading range between $68 and $72 (see dotted lines) and then had a breakout from this range to reach a record high of $86.94 recently (B).

Technical indicators confirm the bullish status of the U.S. nuclear plant operator's stock: The 40-week moving average is trending higher, the volatility system indicator (VSI) shows positive momentum, and the moving average convergence divergence (MACD) had a positive crossover (see lower panel). Given the current overbought condition, Entergy may have a price retracement toward $78-$79, which should be seen as a good buying opportunity. Only a decline below $73 would reverse the positive long-term status of this stock.

Point & Figure measurements give targets of $99 and $106 (15.3-per-cent and 23.4-per-cent appreciation potentials from current levels). Higher targets are also visible.

Ron Meisels is a contributor to the website. He may hold shares in companies profiled. See the site for a glossary.