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Tuesday, January 11, 2011

ATPG, part V

This is my fifth look at ATPG. Here are my previous posts:

- ATPG, part IV
- Natty: It's a Gas!, a Review of ATPG, and a look at SWN
- Analysis Update: ATPG and AMX (Feb 5)
- Analysis Update: ATPG and AMX

My last analysis was in the beginning of June while the stock was in a free fall. I saw that it was hitting some major support in the form of lateral resistance and a Fib retrace level.

I initiated a long position at the same time as the post (at about $8.50) and the subsequent bounce was very nice indeed. My projection was a move up to $13 dollar level and that is where I exited my position.

The move carried well beyond that and reached a high recently of about $18.50.

I am writing this post today because the move up to the $18.50 level coincides with a retrace of 62% of the Apr-June down move of last year and is also a touch of the downtrend line of all the major peaks since 2007. This should serve as some large resistance.

Maybe it breaks the downtrend line this time, maybe it doesn't. But the move up from the June low is very corrective looking and the last peak has occurred on highly negative divergence.

I have shorted and went long this stock several times successfully. I am not currently short, but will think about doing so if it breaks the trend line indicated on the second chart below.

Like I said in my last post, I am very bullish on this stock for the long term. But the recent up move is very corrective looking, and new bull markets in stocks don't start from corrections. However longer term, I would look for another move down to the $8.00 level, or (even better) the $6.00 level. If it does that again, it will complete an A-B-C correction off a previous impulse. That will be a buy it and forget it investment entry IMO.

Disclosure: No current position in ATPG, but entry thoughts are given above
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