Sample of Homework Discussion Stock
001857 TechniTrader® Daily Market Educator for Tuesday 07/17/07

Hi Everyone,

I was asked to analyze MIVA as to whether it has completed a bottoming phase. 

When studying stocks in bottom formations remember that bottoming formations occur at all time lows in a long term bottom and after intermediate term corrections midway up a long term uptrend pattern.  So every time a stock drops back in an intermediate term correction, this provides a new, much lower risk entry.

Position traders should pay particular attention to the intermediate term correction as it stalls and begins to form a bottoming pattern.  These patterns form much faster so that the uptrend can continue within a reasonable amount of time.

As a position trader you would exit prior to an intermediate term correction and then reenter once the bottoming completes.

Back to MIVA:  If we use a tight zoom on a weekly chart we can see that this stock form an inverse head and shoulders bottoming pattern after a 2 year correction phase.  The correction did not form a new low so this is a midway trend bottoming pattern.  There is strong resistance at the sideways pattern formed between 2003 -2004 before the commencement of the correction. 

BOP patterns tell us that this stock was actively traded by large lots all during its life as a listed stock.  Institutional holdings are 54% on 33 mil outstanding shares.  27 funds hold shares. 

MIVA is going through a reinvention phase fundamentally where it is laying off personnel and redesigning their company to streamline their business and make it more efficient and productive. Since the May 7th earnings showed a significant improvement in negative earnings moving close to being positive, all of this recent news is causing the stock to climb vertically on a weekly chart. 

MIVA had a great base for a good entry in May just as it began the climb up.  June’s consolidation is much weaker support and doesn’t qualify as position trade support.  Since support is now far away from price, it has become a swing trade style pick, rather than position trade. 

It is right at the gap resistance from 2005 when it gapped down three times .  The second gap is now the hurdle MIVA must overcome before resuming an uptrend.  It would be no surprise at all to see MIVA shift to a sideways pattern before moving upward again.

There is some speculation in this stock as it heads into the final three weeks before earnings will be released.  

MIVA doesn’t move much in terms of points gained per run and the candles are quite small so overall it is a higher risk entry at this point. 

If earnings turn positive, MIVA could be in for some speculative trading that takes it higher just before earnings are announced and then heavy profit taking the day of the release.

TSV for swing is okay, but not perfect. RSI is floating about the overbought line indicating momentum in this stock. Moneystream is at the top of the chart but horizontal, indicating a momentum pattern.  Stochastic is also a momentum floating pattern. 

The ideal entry however was back in May for lower risk.  The closest support is the June consolidation, which is a weak candle consolidation pattern.

Those holding: switch to a swing trade stop loss under current consolidation lows for this month.  

I do not see this as having a lot of points for a swing trade entry at this moment.

Trade Wisely,

Martha

Martha Stokes, C.M.T.
Member of Market Technicians Association
Senior Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses

Martha Stokes C.M.T. © copyright 2007 all rights reserved. 
 

Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader®, its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues.  At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader® and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader® is not a broker or an investment advisor. It is strictly an educational service.