Hi Fred,
I think the first thing to do with AVCT is step back a bit:
askresearch.com
On this chart, you can see that AVCT is clearly in a downtrend, i.e., it is trading below all the major long-term moving averages (50, 100, and 200), those moving averages are downsloping, and it has made a series of lower lows, and lower highs all below the moving averages.
To me, it is important to first answer this question: is the stock in an uptrend, a downtrend, or a sideways consolidation? These are the only possibilities, which might be obvious, but still cannot be overemphasized, because in general a stock will continue in a trend until that trend reverses. I put the burden of proof of such a reversal on the chart; it must prove itself.
I think it prudent to take long positions in uptrending stocks, short positions in downtrending stocks. Contrarian investing (i.e., long a downtrending stock, 'anticipating' a reversal) is like swimming upstream, and the odds are against you.
Now if you switch to a shorter time frame with faster moving averages, you can see a different picture, within a picture:
askresearch.com
Here, AVCT has at least stabilized, after forming a W-bottom formation. But has it reversed?
My answer is that you cannot say yet. For one thing, the high formed off the bottom at about 32 1/2 (on 1/13) has not been taken out yet, and one of the first things which must take place to make this a reversal is that there must be a series of higher highs and higher lows. You don't have this yet with AVCT, although there are now two higher lows.
The next thing which must happen to make this a reversal is the short term moving averages must be tested successfully, and must change slope from downsloping to upsloping, then cross one another and rearrange themselves in reverse order, top to bottom, with the stock trading above them. This clearly is not the case with AVCT. As yet, only the 10 day ema is upsloping, and the 20 day is horizontal, and the 50 day is still downsloping.
Also,note that recently AVCT has approached the 50 day, and failed decisively there in this recent downtrend (e.g., first week in December). And now, it is once again approaching that point. Until it shows otherwise, I would assume that the downtrend will continue, and AVCT will most likely fail at the 50 ema or before that. The other (less likely, I think) possibility is that AVCT will enter a sideways basing period----which could resolve with a break either way, but with a downside break more probable IMHO.
There are early sell signals technically (OBV and Williams), though these have not been confirmed by stochastics yet. The last three candles look cautiously optimistic, however. Also on the plus side is the intraday chart:
askresearch.com
Here you can see that AVCT successfully tested the 200 min ema two days ago, breaking the short-term downtrend. However, it then went on to fail at a test of support at the now upsloping 200 min ema today, yet managed to find candle support at 29 (that support level was established last Thursday), then promptly bounced off that candle support, again successfully testing overhead at the 200 min ema.
One of the things I would want to see on the intraday chart is a clear picture of the trend relative to the 200 min ema. That is, I would want to see two successful tests of support at the rising 200 min ema for a long position, or two unsuccessful tests of overhead resistance at a falling 200 min ema.
I don't see a clear and compelling case for either a long or a short position at this time in AVCT. For a swing trade or longer, I would want it to at least break support at 28 before shorting it, or successfully test overhead at 32 1/2 before considering a long position. For a daytrade or overnight, I would want it to make its intent clear, vis-a-vis the all-important 200 min ema.
But, as always, JMVHO.................YMMV
Walkingshadow |
