Analogic Hot Streak Continues

05/02/12 10:20:19 AM

by Koos van der Merwe

Analogic's margin hot streak continues.

Security: ALOG
Position: Buy

We are always looking for a stock to purchase that will give us a good return. Double bottoms can be a good warning of what lies ahead. The chart of Analogic in Figure 1 is a case in point.

FIGURE 1: ALOG, DAILY

Graphic provided by: AdvancedGET.

Figure 1 shows the double bottom that formed on October 3. The price then rose strongly, giving a buy signal as it rose above the upper JM band. The problem with the JM indicator on the chart is that failed buy signals were given on August 26 and September 26. On August 11, a relative strength index (RSI) buy signal was given, which also failed. Why then is the buy signal on October 5 so important? It is important simply because of the double bottom that formed, suggesting a more definite and very positive buy signal on October 5, a signal that has shown good results.

The RSI has given a sell signal on October 28, with a buy signal on March 6, and once again a sell signal on March 8. Following the RSI signal would have kept us from buying the share on the signal given by the JM internal band on April 24. So do you follow the RSI or the JM internal band indicator?

FIGURE 2: ALOG, DAILY, WITH ELLIOTT WAVE

Graphic provided by: AdvancedGET.

To answer this question, I looked at the Elliott wave configuration of the chart. This shows that a fourth wave has been completed with a wave 5 target of $79.57. The wave formation on the chart is a formation provided by Advanced GET. Yes, there is a problem with the wave count, in that it does not follow the first rule of Elliott wave, namely that the chart must look right, but with a 55 PTI (probability trend indicator) as shown.

With a buy signal given by the JM internal band indicator, and finally with the bars in blue, colored by the XTL trading strategy, also from Advanced GET, I would be a buyer of Analogic at the present price. (Note the XTL indicator suggests a trend. Blue is positive, black is neutral, and red is negative.) See Figure 2.

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.

Address:	3256 West 24th Ave
	Vancouver, BC
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DOUBLE BOTTOMS

Analogic Hot Streak Continues

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