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Weekly Wizards

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Three Winning Charts to Watch!

Wed, Aug 6 2008, 06:15 GMT
by Harry Boxer

AdviceTrade.com

Editor's Note: Harry's Charts of the Week are posted each Sunday evening for subscribers to Harry's The Technical Trader service. The posts include video chart analysis. In this week's "Wizards," we share with you Harry's three top charts, transcribed from his weekend video.

Our first Chart of the Week this week is Pharmasset (VRUS), which had exploded from about the 13 area to the low 30s in early January before backing off into the mid-20s. The stock then took off for a big pop of about 50%, or 12 points, over a 5-day period in the same month.

But since then the stock came down, based out, formed a coil, and then exploded out of the coil last week. For three consecutive days last week, Wednesday-Friday, the stock had up-days culminating with a 1.81 move on Friday on the heaviest volume in four weeks, breaking it out across lateral price resistance at about the 20 1/2 area.

This is a significant breakout, putting it at about six-month highs, and perhaps leading it quickly to around the 24 1/2 area, my initial target. Secondary target would be in the 29 area and then beyond that possibly something in the low to mid 30s, a retest of the January highs, but that remains to be seen if there's a follow-through.

What I do like is the fact that the underlying technicals have been moving up steadily to new highs for the year, despite the fact that the stock is quite a ways price-wise from the highs for the year. On-Balance Volume, Money Stream and Balance of Power all look good and are improving, and this one looks to me like it has a lot of potential despite the potential negative market.

Our next Chart of the Week, C&D Technologies (CHP), has exhibited one of my favorite patterns -- a long decline of several years followed by a basing period, which lasted about a year and a half, and then a nice price volume surge in early June. This broke the stock out across resistance and the declining tops line, after which it moved into a consolidation phase that held up very well in terms of underlying technicals, moving into a low-volume ebb.

This is an area that could be very interesting, and an opportunity to pick it up as it's pulled back from its June highs without being able to generate enough volume to break it through -- a lot due to market conditions. The consolidation after the breakout that saw the stock move from about 4 3/4 to 9 1/2, or about double in a six-week period, could be a set-up for a very nice long-term move.

A look at the weekly chart shows that the very distinct decline it's been in, including the accelerated channel, finally was broken after the basing pattern set it up for that break out. So this is a stock that could make substantial progress, and I'd be looking for something up towards in the 11 area, 13, and then the 18 zone long-term, perhaps something as high as the lows 20s over time.

The third and final Chart of the Week this week is a stock that's been on our Fab 40 list for a few weeks, Almost Family (AFAM), a home and healthcare services and nursing home organization that 's been doing phenomenally. With only 8 million shares outstanding and 6 million floating, and $134 million in revenue and growing, this is a potential flyer. But it's extended short-term.

The stock had a nice base from June of last year until May of this year, broke out, flagged and has moved its way higher and actually accelerated over the last few weeks. The weekly chart shows the heavy concentration of volume over the last 4-5 weeks, which is extremely bullish, with a sharp rise in On-Balance Volume and technicals. The top of the channel shows that a move to the mid-to-high 40s is possible, which would take it up 10-15 points over the course of the coming weeks. From a short-term standpoint it's gotten a bit ahead of itself, although in the last 6-7 days it's really been consolidating until Friday when it jumped 1.92.

If it continues from here, it could spike up into that 39-40 area, which is our initial trading target. A secondary target would be up in the low-to-mid 40s, but short -term support is at the 31 zone, near the rising 21-day moving average. Any pullback towards that area would be ideal, particularly on low volume, to maybe add to the position.

Certainly below that there's much stronger support in the 28-29 zone, near the 40-day moving average, but I hate to see it pullback as much as 6-7 points and get down into that range. I'm looking for higher prices. Underlying technicals are actually improving, and this one looks very powerful, but it is thin, so it needs to be traded carefully.

Published on  Wed, Aug 6 2008, 06:19 GMT