Bullish setup in Destination Maternity Corp.

Posted by downtowntrader | 2/08/2010 11:22:00 PM View Comments

Stock Chart Analysis DEST
Destination Maternity Corporation (Public, NASDAQ:DEST)

As I scanned the markets tonight for possible setups that could be developing over the next day or two, I ran into a very large percentage of charts that looked bearish. With the late day reversal on Monday, many stocks finished near their recent lows and are threatening to slide past very important levels. Although it appears that the markets could accelerate to the downside in the very near future, I like to prepare for all scenarios, and it is still a possibility that last Fridays lows hold as some sort of bottom. The markets are an important junction here, caught between a routine pullback and the beginning of a much more serious decline and nothing can be counted out at this point.

I only found a few bullish setups, but this one in DEST stuck out to me as a great setup. DEST had a very strong rally from the bear market lows in March through early August, rallying from under $5 a share to over $23 per share. It then entered a consolidation that has lasted several months. It recently cleared the consolidation, even as the general markets continue to deteriorate. While DEST has had a fairly strong runup in the past couple of weeks, it may have more upside. DEST is forming a bull flag right at the breakout area and could get going if it cleared the flag. The weekly chart also looks pretty decent and DEST could be a strong option as a long setup if the markets can stabilize and push higher.

**UPDATE 02/09/2010 am ** Just a side note that this issue is very thinly traded, so please factor this into your trading decision. I currently have no position, but will still consider an entry based on the chart setup.

Good Trading,


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