Electronics Boutique Holdings: Is The Party Over?
Electronics Boutique is trending up, with a couple of gaps as well as support from various indicators.
Gaps often appear on charts. They are a pictorial presentation of the difference between the demand and supply and their occurrence has some significance when it comes to price forecasting.
In a trending market, many stocks outperform the index, and on many occasions, they form various gaps. Usually you see a breakaway gap followed by a runaway gap, and then, towards the end of the trend, an exhaustion gap. It's not a rule of thumb that all three gaps have to occur.
FIGURE 1: ELBO. The ADX of Electronics Boutique Holdings is trending down, and so is the slow stochastic, illustrating a correction.
Electronics Boutique Holdings had a dream run from $20 to $60 with gaps in between. There was a breakaway gap when it jumped from $36 to $39 and a runaway gap from $42 to $53 levels. The average directional movement index (ADX) is moving lower, which indicates that the trend is now correcting. In addition, the slow stochastic is highly oversold. This indicates that the correction is about to end and a fresh upmove is in the cards. If the ADX moves above 30, it means the trend is intact.
FIGURE 2: ELBO, STOCHASTIC. The stochastic < 20 illustrates a highly oversold stock.
This may present an opportunity to buy on a dip.
He is a technical analyst based in Delhi, India, a post-graduate from the Indian Institute of Capital Markets (formerly the UTI Institute of Capital Markets), Mumbai. He follows the Indian markets as well the US markets very closely. He has been active in the capital markets for the past five years.
He is an associate with AGIP Securities, which specializes in money management, index futures, live chat for daytraders, and independent technical analysis consultancy. The company has a big media presence from the likes of CNBC, NDTV Profit, and ZEE Business.
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