HI Chris,
We had very nice action today.
It broke up thru its pivot point(17.75 +.10=17.85),on a Breakaway gap and traded on BIG Volume - Did I say BIG VOLUME??
From my "The Technical Analysis Course":
"BREAKAWAY GAP" :
Most breakouts from a horizontal price boundary are attended by a breakaway gap.
TYPICAL PRICE ACTION: A breakaway gap occurs on a price breakout through a horizontal pattern boundary.Typically,the horizontal pattern boundary is part of a price congestion pattern(such as an ascending triangle) and the breakout marks its completion.For example,suppose a stock has traded up to $21.00 per share,stopped and turned lower over and over.This would suggest both a persitant demand for and a large supply of stock available for sale at the $21.00 level.Current stock holders observe the price action and make their stock available at the $21.00 or figure that once the stock breaks the $21.00 barrier,it will go much higher(Therefore they hold their stock for the time being).This creates a vacuum so that once the supply of stock at 21.00 is absorbed,the next buyer finds none available at 21 1/8,21 1/4 etc.He or she must bid higher and thus create the breakaway gap.
TYPICAL VOLUME ACTION:Volume is normally heavy when a breakaway gap occurs.If volume is higher before the gap than after,chances are 50/50 that the gap will be filled on the next minor reaction.If volume is higher after the gap than before,chances are slim that near term reactions will fill the gap.
Note: I show volume for today at 691,398 shares vs yesterday's volume of 345,000 (" four times its normal turnover"/IBD). So that part looks real GOOD !!
"TECHNICAL ANALYSIS TIP":
Almost every legitimate breakout from a price congestion formation is accompanied by a breakaway gap.Although not all breakaway gaps appear on charts (because they occur during the day nad not between one day's closing price and the following day's opening price),beware of breakouts not accompnied by gaps.Gaps seldom occur in false breakouts(those which do not follow through in the direction of the breaklout.
FREQUECY of OCCURRENCE: Breakaway gaps occur much less frequently than common gaps,but often enough to warrant watching for them.
TECHNICAL SIGNIFICANCE:
Breakaway gaps are highly significant.They often siganl the start of a rapid price move in the direction of the breakout.In the case of an upward move,this is due to buying demand that is stronger than selling pressure,often resulting in prices moving up quickly until balance is restored between supply and demand.The opposite is true for down movements.
We have a classic and strong Breakaway gap.Let us hope for a long ride before balance is restored.GG
Can you say 20's buddy - it looks real good here.
Now lets get IBD to hype it just a tad.
Bob |
