Click chart to enlargeRBCN looks as if it's inside an ascending triangle, perhaps at the top of a high-flying flag. We don't put much emphasis on recongnizing all of the several thousand various chart formations because people that do so lose credibility very quickly. There are really only a small handful of formations a chartist should be aware of, and the triangles are one of them. Even if you want to shy away from putting a fancy name on them, you should note when a chart is bound by resistance and support levels, particularly when either of the two are ascending or descending. These patterns are merely a map of current investor psychology (sentiment), which is why certain formations appear time and time again.
Right now, the chart of RBCN is telling us that each time the stock sells off, traders are hell bent on not missing the next bottom. So much so, that each bottom is higher than the last. In other words, they'd rather pay up for the shares than miss the train. Most ascending triangle patterns break to the upside. Not always, but most of the time this is the case. If RBCN shows signs of an imminent breakout, we may be buying more of it despite having to average up. This is because during this current period of great instability in the broader market, RBCN's performance has thusfar been unwavering. If everything we preach on this blog about relative strength is true, stocks like RBCN that resist the decline make the best investments when the market turns around.
2 comments:
RBCN's strength continues to impress... just bought some more. We're now almost 50% invested.
I thought that RBCN was doing more volume than usual. Most of the time it takes all day to get to 250K shares traded, but today it hit 250K in the first 30 minutes.
It does indeed look like it's ready to bust a move to the upside. Let's just hope that the indexes aren't forming the "right shoulder" here.
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