It might be a mistake to take a nibble on Skystar Bio Pharmaceutical Company (SKBI), Dynamic Materials Corp. (BOOM), or Whole Foods Market, Inc. (WFMI) right now. There's nothing inherently wrong with any of these companies, but their stocks might be headed lower before they point higher again. Here's a detailed analysis.
Though
Dynamic Materials Corp. (
BOOM) shares are up today, the strength still doesn't unwind the last couple week's worth of weakness. The buying volume has been weak on the few bullish days we've seen of late.
The pullback began in early June after an explosive move to $23.17 after the company declared a 4 cent dividend following a near-200% gain from March's lows. The kiss of death was the market's realization of those big gains -
and the massive influx of bullish opinions and accolades (mostly the Motley Fool). It was a profit-taking opportunity for the pros; the amateurs were more than willing buyers.
The problem is, BOOM was stochastically overbought just a few days ago, yet didn't even break aback above the 50 day line.
Dynamic Materials is one you may not want to slide into until it's fully oversold.
Whole Foods Market, Inc. (
WFMI) had a great July, no question about it. The stock did an about face on July 8th ion the heels of news regarding a private label program, and the Motley Fool chased WFMI all the way up to $25.14 by Thursday.
Every day since then (including today so far), the stock has struggled to stay anywhere near its upper daily trading range. In fact, it's had to fight just to hold the prior day's lows (and it's failing at that).
The result is called a gravestone doji.... the shape of the bar(s) with an open and a close near or at the low for the day. The gravestone doji suggests the sellers are quietly but firmly selling shares, yet not doing so to the point that the stock completely implodes. When these dojis occur repeatedly after a strong rally though (like now), the bulls are usually on borrowed time.
As for a downside target, the chart isn't showing traders any key levels. Rather, any pullback may be complete when Whole Foods Market is stochastically oversold again.
The viable trading history for
Skystar Bio Pharmaceutical Company (
SKBI) is so limited, that any technical analysis of its chart should be taken with a grain if salt. Nevertheless, the stock's liquidity now makes SKBI worthy of review... and possibly worthy of trading.
The key here -
good or bad - is the $17.00 area. That's roughly where Skystar peaked in June, as well as where shares peaked last week. To see them headed lower now isn't a big surprise either, as the stock was technically overbought after a pretty good run in July (from $11.10 to $17.20).
Odds are fair that the $17.00 mark will be broken, which could lead to a full-blown breakout. However, SKBI may need to regroup at the 20 day moving average line at $13.94 first. It's already pointed in that direction as of today. Once there, investors should look for support at that key moving average line as a sign of another bullish leg.
Skystar is a China-based developer and distributor of veterinary healthcare and medical care products.
