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by Koos van der Merwe
Is the pattern a double-top double-bottom formation or a flag?
Position: Accumulate
Koos van der Merwe
Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.
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DOUBLE BOTTOMS
Take A Dive Into SCP Pool
08/04/11 09:04:34 AMby Koos van der Merwe
Is the pattern a double-top double-bottom formation or a flag?
Position: Accumulate
| I find it surprising that with the economy in the doldrums as the politicians in Congress place their political ambitions ahead of the economy, that SCP Pool, a supplier of swimming pool, spa, and backyard-related supplies and equipment, should suggest a possible buy pattern. Then again, the strategy is always to buy when everyone else is selling, so very likely someone is nibbling at this stock. |
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| FIGURE 1: SCP POOL, DAILY |
| Graphic provided by: AdvancedGET. |
| |
| Figure 1 shows how the price has risen from a low of $18.38 in August 2010 to a high of $31.01 by May 2011. In April 2011 the price formed a gap, and the price did indeed fall to fill that gap, falling as low as $26.20 by June 2010. The price then rose to $30.88 by July 5, falling once more to $26.11 by July 29. Now, is this a double-top double-bottom formation, or is this a flag pattern? In either case, the share should now rise to test the upper trendline, giving a return from present levels of greater than 10%. However, if the pattern is a flag pattern, then the price should continue rising to a target of $38.74 (31.01 - 18.38 = 12.63 + 26.11 = 38.74). With a flag pattern, one should also wait for the price to break the upper trendline before buying. The relative strength index (RSI) has also suggested a buy, so one could nibble slowly at the share in this very uncertain market climate. A share to watch and buy as and when the market starts recovering. |
Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.
| Address: | 3256 West 24th Ave |
| Vancouver, BC | |
| Phone # for sales: | 6042634214 |
| E-mail address: | petroosp@gmail.com |
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