Boom Update

Posted by downtowntrader | 2/12/2006 08:53:00 PM | 1 comments »

Here is a boom analysis by request.

BOOM has fallen pretty hard lately and there could be several reasons. First, Small caps / IBD type stocks have been getting hit hard lately. Second, Steel / Industrial Materials have also been hit hard lately. Third, BOOM earnings are coming soon, and some are worried about guidance given on the last call. Whatever the reasons, it doesn't matter as there are more sellers then buyers, plain and simple. BOOM has broken some short term support, but the long term uptrend remains in place. It is very hard to say which way it is going in the near term, but there are some clear lines of support and resistance on all the charts.

We'll start with a fibonacci retracement and fan chart. I used the low of the last correction. The 38.2% retracement is near 28.52 and may hold. Next stop would be near 26. Looking at Fans, the 38.2 gave way, but they are not like horizontal trendlines. They are more like magnets and Boom may try to follow it back up for a small bounce. It looks like it may try and follow the 38.2 up and then give way to the 50% fan. Look at my previous post on how I use fans.

Daily chart: Boom broke the long term uptrend line and the 50 sma. There is a possible downtrend channel that shows possible support near 26-27. There is also gap support near the same area. There 61.8% fib retrace of the last leg up also points to the same area as possible support.

The weekly chart has given a SAR sell signal. Support looks to be at 25 and then 23 as a worst case scenario.


My thoughts are that boom is near support and may bounce around for a bit. There may be a short covering move before earnings, but it looks like there will be no strong move till after earnings. As a disclaimer, I do own my core of boom but have long since sold my traders.

DT

1 comments

  1. Jamie // 11:13 PM  

    Hey DT,
    Great analysis on BOOM. The P&F chart also confirms your $26-$27 support theory.

    Q4 and full year earnings BTB Tues. Feb. 28th according to Yahoo Finance

    Good Luck.