Here’s another big winner in the 2009 rally, nearly quadrupling off its bottom last autumn.
Price has formed a 4 plus week Square Box pattern. The most important feature is probably the absence of volume throughout the correction. Imagine, a stock quadruples and when it corrects there’s minimal volatility. Nobody wants their money back.
Last week the stock bounced off its 50 MA. It was buyable there. It’s buyable today as well, as it breaks above the trend line connecting the highs of the structure and moves above all resistance to new 52 week highs. Volume is on pace to be nearly double the 50 day average.
If you take entry here I’d recommend a larger than usual stop, down to around $43.50 to allow for a test of the trend line.
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Followup - Never invest with your ego. The market is always right. When you’re wrong, take a quick loss and move on.
ReplyDeleteWith that admonition we’d like to revisit VPRT, which stopped us out earlier today. VPRT’s break out yesterday closed poorly, likely a result of insiders selling about 1.25MM shares. Today’s above average volume weakness is clearly not the best sign. There could be more insider selling, this could be a reaction to yesterday’s selling or the market might have legitimate fears about the stock. What we do know is that insiders sell all the time as a stock moves higher, cashing in gains when they have the opportunity. History tells us that by itself this is not predictive of a top in a stock’s advance.
Price has pulled back near its 20 MA and is now retesting the day’s lows. An institution just hit the bid for 46,000 shares, which has us thinking this could well rebound making this morning’s decline just a shake out.
We are interested in reentry should price find support here and would swing on a close above the lunchtime high of $43.28.
Whatever happens we’ll continue to track this one. We are prepared to walk away but any stock that quadruples during a rally and then sets up perfectly for more needs to be on your radar.