Keep an eye of the volume. If you see volume drop on the pullback, and then move up under increasing volume, this will validate the breakout it had at about 32.5. This means that at the very least it will move up to 36.5 and can even break through that high. Accum/Dist looks good with OBV (volume validating the uptrend). My chart data is a couple days ols and I want to see what happened to the indicators on this pullback which I will do later today. Still, I can see this stock being overextended as indicated by the RSI and Stochs, so it is very important at this point to see with htis stock that momentum is maintained. Besides the "bounce" under good volujme being important, when the stock has run up and the volume drops, be prepared for an associated retracement in price with this stock.
However, watch out for a false breakout here. In other words you should wait for the bounce to occur at about where it is at right now before moving back in to the stock. If the bounce does not occur, with volume validating, and instead of stock drops down past 32, then be prepared for a substantial drop. 25 is possible in this scenario.
It would be of interest to see what news launched this stock into its current uptrend, and to see what the recent news is that relates to this earnings expectations of this company This stock does have a 98/95/A IBD ranking, which is very good, and also has a S&P rating of "B" which is very good for a small company.
Richard, correct me if I am wrong, but the IBD rankings indicate that the comapny has an earnings strength of 98 out of 99 ranking, which implies a very good and consistent earnings growth over the past few years, and a 95 out of 99 ranking for its relative strength rating. This is the type of stock that will participate in the markets move up and even exceed it. It also has an accumulation rating of "A" which indicates that there has been strong evidence of accumulation in this stock. The S&P rating of "B" indicates basically the short term health of the company's ballance sheet, such as the company's ability to pay its bills. A "B" rating on what appears to be a small company is very good. There are much large companies that do not receive this rating from S&P. This company even has an established bi-annual dividend which is surprising to me. There was a special dividen declared on top of the periodic dividens im January of 50 cents which is quite substantial compared with the normal dividen amount, the current yield, and even the reported earnings for a small company like this.
I there has been very recent dramatic earnings increases and surprises, I would be suspect. Even when coupled with revenue increases, I woul be careful since this may relate to the company's recent promotions to the public. As soon as the promotions stop, the stock can fall on the first earnings disappointment. The stock is at a P/E of over 40 right now.
Just my opinion of course.
Bob Graham |
