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Registered User
Joined: 7/24/2006
Posts: 131
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An easy scan uncovered this interesting stock (SPSX), which appears to have broken out of a double-bottom base formation dating back to early May. At first I figured it had extended too far (My ideal buy point would have been 30.00) to purchase right now. All of my indicators (BOP, TSV and Moneystream) looked really strong on several time frames. Looking back at the chart I noticed what appears to me to be a somewhat sloppy cup w/ handle pattern beginning in late February that broke down in May, when it began forming the double bottom.
Since breaking out of this pattern it seems to be meeting a little resistance at the May highs, but BOP remains strongly indicative of buying and money stream has steadily been moving up.
My question:
Would a significant break through above this resistance line signal a secondary buy point or would I leave myself vulnerable to a pullback? I would welcome any insight.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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brexxx
Typically resistance (when broken through) becomes support.
Notice the resistance at about $26 in FEB06/APRIL06. This
"resistance" recently became support JUNE06/JULY06.
My guess would be that if a strong break through came in the
$34/$35 area. This would eventually act as support. This would be
the area of interest for a stop level.
A decisive break through back below that level (34/35) would indicate
the run was over.
Thanks
diceman
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Registered User
Joined: 10/7/2004
Posts: 11
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Brexx,
The sloppy cup and handle in May, I would think, needed to consolidate longer before it would be a valid pattern. Perhaps that is why it broke down. Agree with Diceman on the S?R landscape.
BGS
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Registered User
Joined: 7/24/2006
Posts: 131
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I see. I think I over-analyzed it. Looks alot clearer now. Please bear with me I'm really new to this.
I want to say, though, this software and its discussion boards have proven so helpful.
Thanks for your time.
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