Heyer Capital, LLC

investment management and timely advice from a local CPA (Fox Valley, Wisc.)

Resistance becomes support

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Reviewing charts this morning, I noticed a concept that was worth sharing with you.  After Bucyrus broke out of a base in early Oct 09, it hit resistance at around $50, at Point A.  Rebuffed, it tread water for a couple weeks, before pressing through.  That $50 price level (drawn with a crayon, and not a fine line sharpie) then acted as a hammock through November and December (Point B).

Even after the stock advances and peaks in January, it retraces its move all the way back down to that $50 (Point C. )

lines of resistance can become support as bases develop

Where does it go from here? I’d like to see it form a cup and handle, with a handle peak up near $65-66. The stock, like many others, has been through the wringer the past two years, and it will take sound base formations to work through those emotional excesses.

It’s also helpful to note for investors using 50 day moving averages as buy/sell signals, BUCY just yesterday crossed over its 50 day simple moving average (SMA).

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Written by heyercapital

February 17, 2010 at 9:50 am

Posted in charting, stock ideas

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