Bwld

[Pascal]

Very nice call Mike,
On the subject of group strength, I have an issue with MNST. Very poor group rank, looks like it is a lone wolf stock.
However, I did start a small position on the "Livermore" breakout through $100. The chart looks very good still but the LEV has been deteriorating since. Earnings are a couple of weeks away, but I will be quick to sell on a breach of the 20 day sma. I guess my question is, Would you interpret the LEV as distribution here, or just a consolidation of the breakout? I seem to find myself with some of the right names, but I have become "gunshy" a bit and am quick to sell.
Thanks
Matt

Matt,


I'll respond to your questions.

For stocks that break-out and tend to form a base, the LEV pattern must be used in combination with the AB.
The Active Boundaries show you where the active traders stand in terms of profit/loss. When too many traders earn money, you will see a tendency for the LEV pattern to point down (profit taking) and the AB pattern to reverse back to its neutral zone (where the average profit is 0). At the neutral zone, there is no incentive to sell anymore. therefore, this is where you have to look at positive accumulation pattern for a "jump out of the base" sort of move.

Here, LEV is down and furthermore, LER is -125, which means that compared to past selling tendencies, today's selling is rather strong.

On the other hand, the UP target is still high and there is still room for the stock to go up, but you'd better wait for the selling to slow down first.


Pascal