[isatrader]

Hi,
Can you please comment on ABM.V (attached). It has based for a couple of years and finally broken out recently on huge  volume. The proper buy point was around 32 cents on the breakout I believe but I am wondering  if it is in buy territory right now or maybe best to wait and hope it gets closer to the 30 ema (it is about 20% above the 30 ema currently). 

I have added the monthly chart as I see the cloud is huge and the price has  just penetrated it so wondering if  you also look at the monthly chart in terms of the cloud at least as based on this chart alone it looks like maybe this stock is not a buy given the huge cloud on the monthly so perhaps the easy money was already made.

Thanks for your thoughts.

Brian

Hi Brian,

With regards to the monthly, I don't tend to look at the monthly cloud as much in a recovery stock, as it's guaranteed to be under it, and if it had a large Stage 4 to be a very big cloud. So I don't have it on the monthly chart.

On the weekly, the breakout in February was very strong and rising outsized volume for three weeks before starting to consolidate. The consolidation has formed a flag pattern and is trading below the declining 10 week MA currently, but remains above a strongly rising 30 week sma. The volume on the consolidation / pullback period has been less than the advance, and the relative performance versus the S&P 500 remains strong above a rising zero line.

I don't have the sector charts for it as it's a Canadian small cap, in the Materials / Other Mines sector. But the basic materials industry sector has been one of the weakest during the recovery since Christmas in the US at least. The other negative I can see is the thinness of the stock, as if you look at the intraday charts, it appears to be very thinly traded at times, which tends to mean higher spreads.

In terms of trading it, the 52 week ATR is 0.061 currently, and the most recent swing low under the 50 day MA is 0.52. So the trader stop loss position would be around 0.499 imo, and so with my maximum 2x the 52 week ATR risk tolerance, currently the highest entry point would be 0.621, which is just around where the recent downtrend line meets. So wouldn't meet my risk requirements personally. But is an interesting looking chart.