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VOLUME


Trident Bucks The Market

03/14/07 11:15:02 AM
by Arthur Hill

The major indexes fell sharply on March 13, but Trident recorded a sharp gain on good volume and the January breakout is holding.

Security:   TRID
Position:   Accumulate

The overall stock market suffered two big setbacks over the last few weeks. There was a sharp decline on February 27 and another on March 14. Trident Semiconductor (TRID) declined on February 27 and continued lower until March 8. The stock did not demonstrate relative strength during this time period, but it did manage to hold support at 20 and surge on good volume over the last two days (Figure 1). Given the performance of the NASDAQ over the last two days, this surge shows good relative strength and reinforces the breakout at 20.

FIGURE 1: TRIDENT, DAILY. TRID gapped up on January 25 and broke resistance at 20 with big volume.
Graphic provided by: Telechart 2007.
 
The stock gapped up on January 25 and broke resistance at 20 with big volume. This move also broke the 50-day moving average. TRID then went into a trading range for the next several weeks and bounced off support at 20 twice. The mid-February and mid-March bounces reinforced this support level as well as the mid-January breakout. In addition, note that the 50-day moving average turns into support around 20. I consider the mid-January gap as a breakaway gap, and I expect higher prices as long as support at 20 holds.

FIGURE 2: TRIDENT, DAILY. There have been three advances on good volume in the last three months.
Graphic provided by: Telechart 2007.
 
Volume and on-balance volume (OBV) confirm buying pressure. There have been three advances on good volume in the last three months (Figure 2). TRID broke resistance on good volume in mid-January, bounced off support at 20 with good volume in mid-February, and again surged off support at 20 in mid-March. These volume surges show healthy interest in the stock and this increases the chances of a continuation higher. The OBV also confirms sustained interest. The indicator broke above its August–September 2006 high in February 2007 and moved above its February high this month. The new highs in OBV show strong buying pressure and I would expect the stock to follow.



Arthur Hill

Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.

Title: Editor
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Date: 03/14/07Rank: 4Comment: 
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