HMIN is a Chinese hotelier. There would be nothing remarkable about this stock, nor would it attract us, if it operated in a mature market. But this is yet another Chinese company pioneering a sector in this industrializing economy, so it is reaping the benefits of rapid growth.
The stock is attempting to break out of a powerful pattern called an Ascending Base. Notice the three successive short cups on the daily, one on top of the other. O’Neil preaches that in a market that is correcting or having difficulty moving higher, as we have been in, strong stocks will pause to form bases, but very strong stocks will advance while they base. Thus, the Ascending Base.
The stock is attempting to break out of a powerful pattern called an Ascending Base. Notice the three successive short cups on the daily, one on top of the other. O’Neil preaches that in a market that is correcting or having difficulty moving higher, as we have been in, strong stocks will pause to form bases, but very strong stocks will advance while they base. Thus, the Ascending Base.
This pattern should be nine to 16 weeks in length. Each cup should correct roughly 10 – 20%. The break out of the third cup should come on heavy volume and is considered buyable. Today’s volume, as we publish, is nearly equivalent to the 50 day average in less than two hours of trading.
The market has been tenuous and we have been cautious about initiating new positions. Thus we’ll keep a tight stop on this, using a break of $32 as our exit, especially should the market’s move higher so far today deteriorate.
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