TSTC coiling for a big move

Posted by downtowntrader | 3/11/2010 12:27:00 AM View Comments

Telestone Technologies Corporation (Public, NASDAQ:TSTC) has been an incredible performer over the past year, rallying from under $1.00 a share to almost $25 in a steady climb. It finally succumbed to some selling pressure in January and began to correct the large rally. It has been consolidating since then and is starting to form a triangle. Price action is starting to coil tightly, hinting at a sharp move in the near future. Typically, these consolidations end up being continuation patterns, with the resulting breakout occurring in the same direction as the preceding trend. However, it's interesting that volume has not been decreasing in this issue as it consolidates as would be typical for this pattern. Volume has been high, so there are warning signals that it could have more work ahead of it before attempting a move higher. The last few moves up have been met with selling just above $22. This provides traders with valuable information, as a move that can hold above this level would likely lead to a test of the all time high near $25. A move below $16 would likely lead to a test of the bottom of the range near $12.

TSTC has well defined levels to watch and in either case, traders are probably better served waiting for TSTC to prove itself. The way TSTC is coiling up, it could lead to a sharp move in the near future and could offer a great trading opportunity.

Good Trading,


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