Dim View For Invision Technologies

10/28/02 10:24:02 AM

by Gary Grosschadl

Invision is coming off a double top and looks vulnerable if the nearby moving averages fail to hold.

Security: INVN
Position: N/A

The daily chart for Invision (INVN) shows multiple negative divergences, giving credibility to a downturn. However if the double top pattern fullfils, there could be a big downleg. This stock has had quite a run since beginning its uptrend via the upward trending channel. It seems to have hit a ceiling as the double top suggests and looking back I see previous congestion. As these patterns unfold, looking back for key areas is often insightful as previous support and resistance still influence future action. This occurs because human nature and behavior have a memory.

At the very least, a move to the lower trendline can be expected, but as before the stock may find temporary support at the 20- or 50-day exponential moving averages.

Graphic provided by: stockcharts.com.

Measuring from the top of the double top to the trough in between is approximately 9 points. This gives a bottom target zone below $20. This does not mean it will go that far down but the potential is there.

If the lower trendline is violated, I favor the first target zone as marked on the chart. The top black line at about 27.50 lines up nicely with the previous hammer and the bottom of that very bearish candlestick last April. This could offer good support. The next strong support likely kicks in at about $26 where there are several key areas from the past, including two previous gap zones.

For this double top to fail with conviction, watch for expanding volume (the greater the better) as it weakens below the bottom channel trendline around $29. A move back up to the trendline to test the pattern is a real possibility and subsequent failure there would be another opportunity for those targeting a short position. Should the overall markets hit more turbulence and challenge new lows once again, stocks exhibiting patterns like this bearish double top can keep traders profitable on the short side.

Gary Grosschadl

Independent Canadian equities trader and technical analyst based in Peterborough
Ontario, Canada.


Website:	www.whatsonsale.ca/financial.html
E-mail address:	gwg7@sympatico.ca

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Date:�10/29/02Rank:�3Comment:�

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DOUBLE TOPS

Dim View For Invision Technologies

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