RE:RE:RE:RE:RE:RE:CJ: Technically overbought based on 2 key indexesstockfly, funds pay more attenion to weekly charts than the dailies. Even on the daily chart, Cardinal has just moved into momo territory. Since mid June, CJ has been in a range between $4 and $5. It appears to be breaking out with Friday's close of $5.05. I look for a new trading range of $5 to $6 in the near term.
The weekly chart suggests that the downtrend has ended and we are in the early stages of a new uptrend (low, high, higher low,.higher high - 3.76, 4.91, 4.08, 5.xx). Also of note, CJ heavily overshot to the downside. Often times, when that occurs, there is a furious move to the upside within a condensed time frame (fundamentally, this is commonly caused by short sellers covering their shorts). CJ closed lower for eight consecutive months. A reversion to the mean implies much higher prices in the intermediate time frame.
One of the best tools for timing buys and sells are Acceleration Bands. Most chart services provide this indicator. I use the standard settings (period =20, width = 1). When a stock closes above the upper band or below the lower band, there is a decent possibility of a strong momentum move. For example, CJ closed at $5.68 and below the lower band on May 31st. On June 1st, the close was $5.77, just above the lower band ($5.74). After the market closed on June 1st, the acquisition and financing details were announced. The ensuing sell-off lasted more than 3 weeks, with CJ eventually bottoming at $4.22 before it was able to close within the bands.
The decline measured almost 25%.
On Oct 31st, CJ closed above the upper Acceleration Band and has succeeded in closing above the band every day since. Upper Band is at $4.81 and is increasing at a current rate of approx 3 cents per day. Long traders could use a close below the Upper Band as an exit.