A low in late July is leading to another leg higher. (October 06, 2012)

by DAN CTRP 
I’m Dan Fitzpatrick at StockMarketMentor.com and OptionMarketMentor.com on Saturday, October 6th. We’re going to look at Ctrip ( $CTRP Ctrip.com International, Ltd. (ADR) ). They’re a few other volatility squeezes that are particularly good but so is Ctrip ( $CTRP Ctrip.com International, Ltd. (ADR) ) so we’re going to focus on this one. The stock, you can see, was in a downtrend quite a while, big move there, and then after breaking out above the fifty, you know you can draw these lines a bunch of ways, there’s one box, you can also say, well we’ve got a series of higher lows which also works, then we’ve got a series of higher highs; so is this a lower high? Well, maybe not because we don’t have evidence that this is peaking at all. In fact you look here, look at the trading volume on Friday, trading volume was up, we’ll just call it average pricing but that average pricing includes days like this, and this, and this, and this. These big days most of which, certainly not all of which, were at least here the three big ones here are what? All buys, these are all positive closes here, which gives me the sense that Ctrip ( $CTRP Ctrip.com International, Ltd. (ADR) ) is in this basing pattern close to moving higher. So here’s what I’d suggest doing, a couple things, first of all note how here the stock broke out and failed, that is not fatal to the current situation because, what was the status of the stock? It had been moving up for quite a while, look at the Bollinger Bands how wide they were during that failed breakout verses now they’re pretty narrow and the stock has moved up, just off the top of my head, almost 10 percent not quite 10 percent I think from bottom to top so it’s still made a bit of a move but what I’d suggest doing is if the stock does close above the upper Bollinger Band that’s a time that you can buy the stock. Frankly, on these types of kind of lose squeezes, I’d like to be try to get them on a little bit of a pullback closer to support because then if the stock winds up breaking out to the downside you’re out early, you’re good to go. So if Ctrip ( $CTRP Ctrip.com International, Ltd. (ADR) ) pulls back don’t consider this a failed breakout because it hasn’t broken out yet, rather consider it an opportunity to buy closer to the lower Bollinger Band because this stock has definitely turned the corner; I mean just zoom out and take a look at it, you know squint your eyes to get some clarity, here, again, just squinting your eyes, it’s the Fitzpatrick patented eye squint test, here you can see the consolidation, here, big move lower, a breakout above the 50-day moving average and then sideways consolidation. This is what reversals are made of, so this is a good opportunity to get this stock after a big massive pullback; I have just kind of showed you how to do that. Okay members, get over to the Weekend Update; we’ve got two fairly extensive videos and then a shorter Stock Watch video that focuses on, actually on some of the telecom sector and few others that are working particularly well; so I will see you guys here next time.

Free Chart