I should add at this point that if there was a technicaly positive event, and I can also associate this to recent positive fundamental events, then this is very good. Technical events supported by fundamental events tends to me more reliable. But the fundamental aspect of this equation is not a necissary part even though in my own approach I usually do look for supporting fundamental events before trading a stock.
In the case of PSFT, I did not use this approach. This is because I liked the technicals I was seeing with this stock which even improved today. The breakout was solid and I know that PSFT has a good following, so there will be a responsive crowd to the recent run up of the stock. Also, high growth is projected for this stock along with a high consensus analyst recommendation for this stock. And the monthly VTO for this stock is at a minimum 30% which is very good and makes for a volitile but responsive stock. So for trading on this breakout, the fundamentals were not important to me.
PSFT today moved through its 50 day MA where the volume went up another 50%. This soon after a good breakout from the downward wedge price pattern is very good. The minimum price objective for the wedge pattern itself is about 61, but it looks like PSFT will move up further than that. However, the upper Bollinger Band sits at about 60. This together with the resistance point of about 61 defined by the previous price action of the stock, the price of the stock will definitely encounter resistance in the price region of 60 and 61. PSFT's test of 61 will be an important test and indicator of things to come for this stock. Today, the stock did hit 60.5 and then packed off.
As I may have said in a previous post, the basically horizontal OBV and A/D does concern me and places into question a continued uptrend. Still, it is too premature to make the call on whether an uptrend will be established in the near future. However, it looks like the downtrend for this stock is finished. So the downtrend appears to be finished, but the an uptrend has not been established at this point in time. Only a breakout and upcycle of the stock has unfolded.
Bob Graham |
