Sep 10, 2010 8:47 AM PDT
You know what the best thing for Valeant Pharmaceuticals International (NYSE:VRX) right now would be? For the stock to just park itself around $47 for a while and move as little as possible. Say what? Yes, you read that right... VRX just needs to sit tight here for a while, simmer, and wait for a better opportunity to move. Here's what I'm seeing...
Clearly Valeant Pharmaceuticals wasn't ready to move past $50.00, as its last three attempts (including today's) to do so were failures. The only thing those moves did were to carry this small cap a little too far above a pretty reliable support line (which was aligned with the 50-day moving average - black).... "too hot". Rather than risk an implosion/breakdown, Valeant just needs to sit tight for a couple of weeks and let this wedge/range converge before making another run. Of course, what it 'should' do and what it 'will' do can be two different things.
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Speaking of 50-day moving averages, Euro Tech Holdings Co. Ltd. (NASDAQ:CLWT) is on the underside of its 50-day line (black), but has knocked down a few walls between here and there to get it into a position to make that break. That ultimate line in the sand is at $1.76... the combination of the 50-day average and the last of its falling resistance lines (blue).
The only problem I see for Euro Tech Holdings shares right now is volume.... or lack thereof. The move above that big wall may draw it out, but we'll need at least a little more volume to get this small cap over the hump. We'll also need a little more to keep things going beyond $1.76. It's a good setup though - definitely something for your watchlist.
And finally, most of the time I've got two or three very sound, very strategic reasons for being bullish or bearish on a stock. On rare occasions though, I feel like a coin toss offers enough of a positive risk/reward scenario to take a plunge. NMT Medical, Inc. (NASDAQ:NMTI) falls into that latter category right now. This small cap got crushed last week, but as is so often the case, the selling went too far - bounce time.... "too cold".
That said, I'd be amiss if I didn't mention I found it interesting how NMT Medical shares hit a low last week right where it bottomed in late 2008..... just above $0.50. I don't think it's a coincidence - I think that was the mental 'rock bottom' for NMTI and its followers. As such, it's all the more reason to buy. It's a true gamble though, so be smart.
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