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Strategies & Market Trends : RESISTANCE LEVELS- Ceilings & breakouts <30 min old
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To: WTSherman who wrote (559)12/2/1998 8:42:00 AM
From: WHL  Read Replies (1) of 621
 
BEAM- discussion of establishment of resistance level...
On 6/5/98 4 15/16 was established as a support level. The stock bottomed at this level and bounced upward. This was reaffirmed on 8/6/98, when the stock bottomed at 4 7/8- and bounced upward once again. When the stock crashed through this level in late August (going down as low as 3 1/16 in a matter of 7 trading days), this psychological support level became a ceiling rather than a floor. On Oct 27, 1998 this resistance level was firmly established when the stock went up to 4 15/16 and fell back.

The current breakout is very strong. It will have pull backs no doubt at some point, but a transition has occurred from a stock that is going down- to a stock that is going up. This is confirmed when one examines the CCI, the 60 day moving average, Bollinger bands, etc. The fundamentals of the company (it is making money) also seem to confirm this reversal.

One thing that gives some pause for thought is the fact that at above 4 15/16 the stock becomes marginable. This means that some buyers may be doing so on margin. Since this is almost always a mistake, I would simply issue the single note of caution that this may be manipulation in order to sucker in margin players and take advantage of their foolishness. To me, however, this seems to be the only cloud on the horizon.
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