VVUS pushing through the upper Bollinger Band (green line)
means that we can expect reactions downward from profit-taking,
which we saw Friday. From Magee and Edwards (1997):
Bollinger Bands-- An envelope in the form of two lines, which
surround the price bars on a chart. Bollinger Bands are plotted
two standard deviations away from a simple moving average.
Common practice is to use a 20-day simple moving average.
When a stock pushes through the upper band, short sellers
get very interested in day trading it, and those with
short-term profits get eager to cash it in.
That's the short-term look. Intermediate term we need to
see continued price rise accompanied by healthy volume.
Looking at the curves of price and volume, in order to
call a solid bottom you want to have the low point of
price coincide with the low point of volume, with both showing something that looks like a catenary curve (the shape of a rope hanging down between two equally high supports).
To me, the chart looks good, but not good enough for me
to go on margin in order to add to my position.
As said before, breakout is at 14, then, hopefully,
it's fill the gap to 19. I expect very heavy resistance
at the 19-21 range.
David |
