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Gaps Up Are Encouraging While a Stock Builds a New Base - Monday, December 19, 2005

Not all breakout stocks pull back and re-test support at their pivot point.  Many issues continue to make steady progress, then consolidate while remaining well above prior chart highs, building a new base.  In the most ideal situations, down days occur on lighter than average volume and/or volume much lighter than that which had accompanied an earlier breakout, followed by more gains on heavier volume again.  In the example below, bullish gap up gains on high volume occurring on December 9th and December 13th are encouraging signs of institutional buying demand. 

Chubb Corp. (CB -$1.08 or -1.12% to $95.48) closed lower on below average volume on Monday.  This leader was recently featured on May 4, 2005 in the CANSLIM.net Mid-Day BreakOuts Report (read here) as it was emerging from a solid base. This issue was featured at $83.62 a few days after it broke out, while it still remained within 5% of its pivot point (below its "maximum buy" price).  Since then, this stock has rallied an impressive +18.9%.  It has been consolidating in a sideways fashion well above prior highs and its 50-day moving average (DMA) line.  Friday's reversal from its initial surge into all-time high territory could be a sign that it was encountering some resistance.  If the most recent low is breached it could be considered a sign of technical deterioration, especially if volume swelled.  That would be considered an early sell signal.



Finding Support at An Upward Trendline - Monday, September 12, 2005

Chubb Corp (CB +$0.44, or +0.51%, to $87.04) was featured on May 4th 2005, in CANSLIM.net's Mid-Day Breakouts Report (read here), at $83.62 as it was breaking out of a flat base and below its maximum buy point. This issue spent the next several weeks rallying almost +8% before pulling back to consolidate its recent move. Then on Friday September 9th, it positively reversed (opened lower but closed higher) after finding support at its upward trendline. This is another example of how leading stocks find support at their upward trendlines.

 
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PICTURED: On Friday, this issue found support at its longer term upward trendline and is now edging higher.