Tuesday, May 30, 2006

Climax tops and SUPX

The high at 200 HANS put in a few weeks ago would have been a great place to go short. The high occured on the highest volume ever, a massive increase over the average. The move took it above it's upper BB before is topped out around the nice round 200$ level. There may be more downside, with possibly a gap fill if the volume doesn't pick up on the upside. The reward is limited here and was intended to me more of an example of a climactic action. From 200 to the upper end of the lower gap on the climax action there was over a 15% drop.
There is a similar type of action in DAKT occuring now. The stock has vaulted above the upper BB on the highest volume days the stock has ever had. The last two times it tried this recently the stock sold off hard intra-day leaving the long tails circled in the chart. The current move looks like it could take DAKT to around 50, a nice round number for a top. If DAKT moved to the upper end of the first gap in this move (around 41) it would be just over 15% gain. Worth note was that DAKT announced a 2:1 split last thursday and may have contributed to the buying frenzy at the end of the week. I read this in an Oneil's book over the weekend: "It is also helpful (to the shorts) if a stock has recently split... The second time a stock splits is usually at a much later stage in the stocks overall move. This is normally too obvious to the crowd to be a rewarding stituation... Like everything else in the stock market it is a simple issue of supply and demand with a large potential supplyof stock that could be offered for sale in the market place."
SUPX jumped out at me in a scan of the IBD 100. It was 76 last week, is now 97 and apears to be comming off for good unless is can shake off some recent sellers. After filling a huge gap down on the biggest volume ever the stock failed to move higher and broke out of its channel up to that point. It now appears to be pausing before the next major leg down.

Also, I still think AAPL is set up to run up to the upper end of the triangle mentioned last week. I added calls on friday.

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