Hi AE,
since this is a weekly chart, of course it's more of a longer time frame picture, but my read is this...
the stock has broken out and closed over both the 50dma and the downtrend line from the all time highs for 4 weeks now...thats very bullish. However, In doing so, it's made what is known as a "Evening Star" formation...which has a pretty good probability of signalling a change in trend in the near future... but it's not infallible
stockcharts.com
If the stock continues to move sideways...or higher, it could still break either way, and you would really have to fine tune with daily and hourly charts... but if the stock breaks down and closes below that downtrend line and the 50 dma on better than average volume, it would be a bearish development imo.
At the same time, the stock is showing a very bearish head and shoulder formation, it's on the chart in purple letters, and that measures to around 6. The only way to negate that bearish formation is to close above huge resistance at 25...then the highs at 32. If the stock breaks down through the "neckline" which is the dashed purple line on the chart, (and effectively the new uptrend line), the uptrend naturally is broken.
The stochastics are saying the stock is overbought, but still could get more overbought. In the past, the stock only lasted about 6 weeks or so at these types of levels before breaking down, and we're at week 4 here, so heads up there too.
Gotta take it day by day, and another guy could read the chart as very bullish... But I believe this is a low volume small cap that's wide open to manipulation, so anything could happen.
It's obviously overbought right now, sitting right on the most important support of the last 8 mos. and showing a couple significantly bearish chart formations.
That's a pretty big caution for me. I still believe this stock will go to $6.5 minimum sometime in the next 12-18 mos... all it will take is one bad report from the co. and the price gets cut off at the knees.
Best Wishes,
John M |
