The 3-year weekly chart of [[BOOM]] shows a stock that has been brutalized. The stock has undercut the base from which it broke out in July of 2007. The breakdown has been a series of waterfalls with each subsequent fall getting smaller than the previous. The stock has been a dream for the talented trader as almost every gap down has been bought until the gap fills, and then the process starts all over.
The weekly chart shows that the downward momentum is slowing. The MACD is showing a clear positive divergence. The stock bounced near multi-year support at $25.00. Unless there is some evil lurking in the BOOM’s balance sheet, or in the industry, I can’t see that the sellers have a lot of juice left here.
I would not be surprised if the Doji printed 4 weeks ago represents the bottom, or at the very least, the beginning of a new basing process.
Long-term resistance is in the area of 40, which is also in the same area as the 61.8 Fib. line.
The daily chart shows that BOOM has been sold off everytime it approaches its 50 day moving average. This is normal. A bullish recovery would be evidenced by BOOM re-taking this average and holding above it.
The MACD on the daily is very bullish. Should it lead the weekly MACD (which I expect it will), it does point to a possible change from downside momentum to stabilization, or even some upside improvment.
In the very short-term, I would like to see BOOM hold 30. However, I will not be convinced that the Bears have lost control of this stock until it clears resistance at 33, as it moves to break above the 50 day moving average.
Overall, this stock is a good example of what happens when funds accumulate, hold, and then begin distributing shares. It can take a long time for all the positions to be unwound. It appears to me that this cycle is near an end. BOOM may languish for eternity as funds move to new names, or the cycle may begin anew if BOOM’s fundamentals warrant a new round of accumulation.
Thanks, Shed. Unfortunately, institutional ownership is still in the 90% range, according to:
http://tinyurl.com/5evtk7
And shorts, although covering, are still active:
http://www.shortsqueeze.com/index.php?symbol=boom&submit=Enter
RSI 14 is having trouble breaking above 50:
http://stockcharts.com/h-sc/ui?s=BOOM&p=D&yr=0&mn=6&dy=0&id=p09497766618&a=82895645&listNum=1
Thanks. My comment got spam filtered. Check this out:
http://tinyurl.com/5evtk7
Woody, In efforts to let your post remain on top, I have edited my timestamp on my last post.
Check it out Wood, lots of good short setups in Ag.
Boom, I think you’ll see that as Q2 holdings are released ownership will drop further. There was a helluva lot of selling in Q2. That can be a benefit for future appreciation.
Large institutional sponsorship is usually not a good thing for growth stocks. In essence, there are not enough shares available for sale to drive the stock back up. I think IBD recommends much lower, say 50% institutional sponsorship, but increasing q over q.
The stock has been a short seller’s dream, so the high short interest doesn’t surprise me. As I said though, I think the juice is running dry there.
I can’t believe how excellent your new avatar is.
Talk about “180 degrees.”
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Wood-
Its so nice to have you back. Its just not the same without you.
I appreciate that Hybrid!
Jake, the new avatar is taking some getting used to, but I do like it.
Wood:
Should we attribute the 12″ ruler to something significant?