Another important factor is the relationship between an uptrend and a stock's pivot point. Typically, stocks begin forming an uptrend after rising above their pivot point. In the event the upward trend is violated, the stock will generally be expected to continue falling until it can retest support. Initial support is often the 50 DMA, or its pivot point, whichever is higher.
Express Scripts Inc. (ESRX -0.06 or -0.07% to $85.39) ended lower on below average volume as it continues tracing out a new base. This issue rallied an impressive +64% since it was featured on Thursday, July 28th, 2005 in the CANSLIM.net Mid Day Breakouts Report (read here) at +$52.15. Since a February 23rd gap down and loss on very heavy volume the stock has been drifting sideways, and it has not managed to post any gains on above average volume in more than four weeks. It is important to note that this issue's 50-day moving average (DMA) line is in the middle of its current base and acting as a bit of a resistance level. This is cause for concern because it leaves only the near-term support near its prior chart lows in the $82-83 range remaining. That may be considered a key level to watch out for violations, as a high volume break of support would trigger a technical sell signal.
Express Scripts Inc. (ESRX -1.46 or -2.38% to $59.86) closed in the lower half of its range after recently violating its short-term upward trendline. However, volume, a key indicator of institutional activity, was below average, offering a glimpse of hope for the bulls. This stock was recently covered on September 26, 2005 (read here) in the Featured Stocks Update section of CANSLIM.net's After-Market Report as it closed directly above its upward trendline. The bulls managed to show up and send prices higher over the next several days until it printed a new 52 week high of $65.58 on October 4, 2005. That was +25% above where it was first featured on 7/28/2005 in the CANSLIM.net Mid Day Breakouts Report. That said, now that the trendline has been breached, the next key level of support is its 50 DMA ($58.73). It is important to note that there recently have been a slew of companies that have broken their upward trendlines and continued declining. Market action overall has recently prompted disciplined investors to reduce exposure to stocks, especially if they are investing on margin. At the same time, be cool minded enough to effect trades based on what you actually see happening, not based on what you fear may happen.
Express Scripts Inc. (ESRX +$0.01 or +0.02% to $59.68) was recently featured at $52.15 on July 28, 2005 in CANSLIM.net's Mid-Day Breakouts Report (read here) as it was breaking through its pivot point on above average volume. Since then this issue has rallied over +19% and is currently resting on its upward trendline. It was encouraging to see this issue end the session near its highs however volume could have been better. If its upward trendline is broken, the next level of support is the 50 DMA ($55.92).
