I will say this. HAMMER! The formation was confirmed today. At this point it looks 'testbook'. I believe that a reversal has just taken place for the reasons given last night
Dennis,
Hi. You pointed out that THQ made a hammer, which it did. Let's examine this:
First, one day does not make a trend. THQI has declined 50% from its highs placed in early December. One Hammer on weak volume (in comparison to the volume THQ declined on) is unlikely to be the final confirmation. If anything, this would only be a first step in a long process to repair the chart.
Second, the stock was expected to bounce. It declined 28% in 3 days. A price reaction against the trend is common in down and uptrends - especially when the price moves significantly in a few days. As example, consider the hammer THQI has made February 1.
Thrid, consider THQ's downtrend line. Before a downtrend can reverse itself, it must penetrate the downtrend line. THQI has tested this line 3 times, and each time has failed to get above it.
To illustrate, I've posted a chart showing THQ's downtrend line and its support line.
stocktrendz.com
One last thing THQI needs to do to repair itself is end its series of lower highs and lower lows. It was only yesterday, remember, that THQI hit its recent low. It hasn't established anything yet. I believe calling this the bottom is premature.
Conservatively Yours,
Raymond J. Norris |
