While we're talking TA, I'll throw my hat into the ring.
I also had noticed a potential double top at $45. It seems that a lot of sell orders exist at that level. Although formation isn't as evident as the one that straddled Xmas 1998/New Year's 1999, it is possible.
In the past couple of years, THQ has generally traded up to 167% of its 200-day MA, and no more (except for March 1998, right before the WCW sell-off, when it was about 200% of the MA). Right now, 167% is about $45, and that's another reason for the apparent ceiling. It happened at the end of 1998, too. Even if THQI stays at 167% of its 200-day MA for the rest of the year, it will only go as high as $60 by year-end. And THQI's peak, relative to its 100-day MA, is usually 150-160%. In March 1998 and in the present, THQI has reached the peak of this trading band. But there's a possible exception.
THQI's 1999 high will likely be $55-60, UNLESS THQI becomes a momentum stock (not unlike EIDSY). Obviously, I don't expect THQI to reach $120 in 1999, but I also have no idea why EIDSY is climbing so high. What I mean is that THQI's historical trading bands may become obsolete if THQI catches enough interest and investor support. The $500 million market cap level has been held, and it could be somewhat important to certain institutions. But if THQI is able to increase the slope of its current uptrend, it could go much higher. If THQI's upper band were stretched to 200% of its 200-day MA, it could peak at $78 by year-end. As a comparison, EIDSY's limit during its 1999 run-up has been 200% of its 200-day MA.
It's just a thought. I don't necessarily think it's going to happen, but it's certainly possible. We all know that THQI has the fundamentals to do it. Even if it reaches $78 by year-end, its trailing P/E will be only 30 (give or take). The spark will not be short covering, but some major announcement, such as an alliance, a license, or most likely--the Q3 earnings report. This event, whatever it may be, may prompt some major institutions to reverse their short positions and establish a long position. This would cause the stock to break out above $45. But a constant buying frenzy by shorts covering their ill-fated positions could certainly fuel such a run.
Let the short-sighted shorts beware.
Todd |
