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GAPS


Electronics Boutique Holdings: Is The Party Over?

01/16/06 01:09:08 PM
by Kanwaljit Singh Mauj

Electronics Boutique is trending up, with a couple of gaps as well as support from various indicators.

Security:   ELBO
Position:   Buy

Gaps often appear on charts. They are a pictorial presentation of the difference between the demand and supply and their occurrence has some significance when it comes to price forecasting.

In a trending market, many stocks outperform the index, and on many occasions, they form various gaps. Usually you see a breakaway gap followed by a runaway gap, and then, towards the end of the trend, an exhaustion gap. It's not a rule of thumb that all three gaps have to occur.


FIGURE 1: ELBO. The ADX of Electronics Boutique Holdings is trending down, and so is the slow stochastic, illustrating a correction.
Graphic provided by: StockCharts.com.
 
Electronics Boutique Holdings had a dream run from $20 to $60 with gaps in between. There was a breakaway gap when it jumped from $36 to $39 and a runaway gap from $42 to $53 levels. The average directional movement index (ADX) is moving lower, which indicates that the trend is now correcting. In addition, the slow stochastic is highly oversold. This indicates that the correction is about to end and a fresh upmove is in the cards. If the ADX moves above 30, it means the trend is intact.

FIGURE 2: ELBO, STOCHASTIC. The stochastic < 20 illustrates a highly oversold stock.
Graphic provided by: StockCharts.com.
 
This may present an opportunity to buy on a dip.



Kanwaljit Singh Mauj

He is a technical analyst based in Delhi, India, a post-graduate from the Indian Institute of Capital Markets (formerly the UTI Institute of Capital Markets), Mumbai. He follows the Indian markets as well the US markets very closely. He has been active in the capital markets for the past five years.

He is an associate with AGIP Securities, which specializes in money management, index futures, live chat for daytraders, and independent technical analysis consultancy. The company has a big media presence from the likes of CNBC, NDTV Profit, and ZEE Business.

Title: Associate
Company: AGIP Securities
Address: C-735A, Sushant Lok-I
Gurgaon, Har
Phone # for sales: 98184-72389
Website: www.ashwanigujral.com
E-mail address: contact@ashwanigujral.com

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