Strong Finish On High Volume Triggers Technical Buy Signal
Thursday, June 10, 2010   CANSLIM.net  

Mercadolibre Inc. (MELI +$4.14 or +7.79% to $57.30) surged in the final hour of today's session and hit a new 52-week high with a considerable gain above its pivot point on volume backed by +79% above average, triggering a technical buy signal. When it was last shown in this FSU section on 5/28/10 under the headline "Gains Above 50 DMA Line Follow Recent Distribution" an annotated graph showed it rebounding above its short-term average after enduring a wave of distributional pressure. In that article said - "It is an ideal candidate for one's watch list while awaiting the new rally effort's confirmation in the form of a sound follow-through day of gains from at least one of the major averages on higher volume."  The considerable gains for the major averages today were an encouraging sign, but lower volume totals on the major exchanges suggested that conviction from the institutional crowd at present may not be sufficient to fuel a sustainable advance.

The Latin American Internet - eCommerce firm was featured in yellow in the 5/13/10 mid-day report (read here) and noted as it traded within 5 cents of its 52-week high. It has found great support at its long-term 200-day moving average (DMA) line, including earlier in the year. The high-ranked leader's pivot point is based upon its 12/28/09 high plus ten cents. Top-rated funds owning an interest rose from 62 in Dec '08 to 98 in Mar '10, which is encouraging concerning the I criteria. Its strong quarterly earnings and annual earnings history satisfy the C and A criteria.