Marc, I'm basing my comments on my book by Clifford Pistolese, "Using Technical Analysis." In his book, he does not indicate anything positive can be determined from a head-and-shoulders, only negative, but only if the price makes a downward breakthrough past the neckline. There are a number of reasons I would hesitate in applying that formation to NPEC. First of all, the pattern is not that pronounced, and the right base of the head barely touches the top of the left shoulder. Secondly, the price of this stock is so low, that the continued downward trend usually associated with a negative right-side breakout is not much of a threat - the fundamental value of this stock would, in my opinion, begin to override that particular piece of T/A. Also, the opening of Last Frontier (or whatever it is) would most likely kill the pattern before a breakthrough were to occur - that is, if they open it before my hair turns grey (in other words, in the next week or so).
P.S. The fact that the right shoulder (if you want to call it that) is higher than the left is much better than if it were lower, in my opinion. I think positive-slope neckline indicates that this stock "wants" to go up, more than down. |
