Direct Focus Pumps Iron
forbes.com
Ben Berentson, 05.01.02, 1:00 PM ET
NEW YORK - Direct Focus is on a roll. The company, which makes exercise equipment including such
brands as Bowflex, StairMaster, Nautilus and Schwinn, reported first-quarter earnings up 63% from the
same period in 2001. Its stock is up 49% this year and now trades at around $45. But according to Dan
Zanger, editor of online newsletter ChartPattern.com, this run is set to continue.
"The volume has dried up after a big move on high volume a week ago," says Zanger. "Then on April 30, the
stock moved up again on high volume and made a new high." He says that this resembles what is known
as a Darvas box, named after technician Nicolas Darvas, author of How I Made $2,000,000 in the Stock
Market. Essentially, a Darvis box refers to a stock that is in the midst of a several-months-long uptrend that
suddenly dips on low volume--forming what looks like a little cup. According to the theory, the stock will then
reassert the upward move on high volume. You can see a similar move on Direct Focus' (nasdaq: DFXI -
news - people ) chart from March 28, when it reached $38, to April 19, when it jumped to a new high of
$42.79.
"The stock also closed near its high for the day," says Zanger. "This is a good sign. It has been making
higher highs and lower lows, and I expect this to continue." He thinks it will reach $60 by the end of the
month and recommends closing out at least half of your position there. |
