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Challenging A Five Month Downward Trend Line - Friday, September 29, 2006
A very important technical tool that savvy investors have learned to incorporate in their technical analysis is the 50-day moving average (DMA) line. The 50 DMA line plays a pivotal role relative to a stock's price. If the price of a stock is above its 50 DMA then odds are that its 50 DMA will act as formidable support. Conversely, if the price is below its 50 DMA then the moving average acts as resistance. Healthy stocks sometimes trade under their 50 DMA lines briefly, but usually a strong candidate will promptly bounce and repair a 50 DMA violation. When a stock has violated its 50 DMA line and then lingers beneath it, the stock's outlook gets worse and worse as it spends a greater period of time trading under that important short-term average line. Once the 50 DMA line starts sloping downward it should also be acknowledged that the stock has been struggling for a while, and it might be time to reduce exposure and look for places to put that money to work in stronger buy candidates.
Mobile Mini Inc. (MINI -$0.47 or -1.63% to $28.41) closed on its 50-day moving average (DMA) line. This stock was featured on Thursday, September 01, 2005 in the CANSLIM.net Mid Day Breakouts Report (read here) with a pivot point of $22.28 (split adjusted). More recently, on Friday August 18th, 2006, this issue was featured in greater detail with an annotated DailyGraph(R) in CANSLIM.net's After-Market Report (read here) and its recent action was discussed.
On May 4, 2006 this stock reached an intra-day high of $37.12 but gave back most of the session's gains and closed modestly higher. That was a very negative reversal pattern (even though it ended with a 14 cent gain for the day) and seen by many chat readers as a techincal sell signal. Since then it could not rally back to challenge that high, and a well defined 5 month downtrend line has emerged. Important chart support still exists near $25, which corresponds with prior chart lows. If MINI manages to rise above its downward slanted trend line connecting recent chart highs, rallying with significant volume, the action would be a very healthy signal. However, if it fails and violates the recent chart lows, even further deterioration would become more probable. Moreover, it is important to note that this stock's group rating (concerning the "L" criteria) has slipped to the poor 175th position on the 197 Industry Groups list, which adds further pressure to this issue's ability to rally.
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Prior Highs and 200 DMA Offer Support - Friday, August 18, 2006
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.
Mobile Mini Inc. (MINI -$0.04 or -0.14% to $28.71) closed lower on below average volume on Friday, continuing to trade above support at its longer-term 200-day moving average (DMA) line. This stock was first featured on Thursday, September 1st, 2005 in the CANSLIM.net Mid Day Breakouts Report (read here) and it went sideways until it violated its 50 DMA with a loss on above average volume October 12th, 2005, then promptly repaired that violation on October 13th, 2005. It made some progress and then consolidated during the December-January period, basically staying above prior chart highs while it spent a couple of weeks again under its 50 DMA line. In February 2006 it got some good volume behind its gains, and it continued rising on heavier volume, even after a 2-for-1 split and an additional stock offering in March 2006.
When the major average started encountering heavy distribution in mid-May, MINI fought to stay near support of its 50 DMA line, but it eventually sank as volume intensified. It stayed well above support offered by its longer-term 200 DMA line and above its Dec '05 high ($25.67). More recently, on Friday July 28th, 2006 this stock appeared in the CANSLIM.net's After-Market Report (read here) as it rallied above its 50 DMA. However, shortly thereafter, this stock slid back below its 50 DMA again. Its group rating has also fallen markedly, prompting more concern. For months, this stock has found support above its prior chart highs ($25-26 area) and above its 200 DMA line. As breach of support at these levels would technically be a worrisome sell signal. Faster gains may more likely be achieved by latching onto another stock flashing a fresh breakout on high volume. Meanwhile, since MINI faces resistance due to overhead supply up to $37, expect further consolidation to continue for some time.
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Rally Above 50 DMA Is Encouraging, But Not A Cup-With-Handle - Friday, July 28, 2006
A very important technical tool that savvy investors have learned to incorporate in their technical analysis is the 50-day moving average (DMA) line. The 50 DMA line plays a pivotal role relative to a stock's price. If the price of a stock is above its 50 DMA then odds are that its 50 DMA will act as formidable support. Conversely, if the price is below its 50 DMA then the moving average acts as resistance. Healthy stocks sometimes trade under their 50 DMA lines briefly, but usually a strong candidate will promptly bounce and repair a 50 DMA violation. When a stock has violated its 50 DMA line and then lingers beneath it, the stock's outlook gets worse and worse as it spends a greater period of time trading under that important short-term average line. Once the 50 DMA line starts sloping downward it should also be acknowledged that the stock has been struggling for a while, and it might be time to reduce exposure and look for places to put that money to work in stronger buy candidates.
Mobile Mini Inc. (MINI +$0.59 or +1.87% to $31.04) continued rallying on lighter volume after closing above its 50 DMA earlier this week with a gain on better than average volume. This stock was featured on Thursday, September 1st, 2005 in the CANSLIM.net Mid Day Breakouts Report (read here) and it went sideways until it violated its 50 DMA with a loss on above average volume October 12th, 2005, then promptly repaired that violation on October 13th, 2005. It made some progress and then consolidated during the December-January period, basically staying above prior chart highs while it spent a couple of weeks again under its 50 DMA line. In February 2006 it got some good volume behind its gains, and it continued rising on heavier volume, even after a 2-for-1 split and an additional stock offering in March 2006.
As the major averages and the broader market retreated during mid-May and June, it fought to stay near support offered by its 50 DMA line; but eventually it yielded to more serious market pressure and gapped down in early June. The consequent movement was noted in greater detail in the June 19, 2006 CANSLIM.net After Market Report (read here).
Since MINI's latest 50 DMA line violation, it found support above its 200 DMA line and it has recently managed to trade back above its 50 DMA. There is still a significant amount of overhead resistance above Friday's closing level. However, MINI has done a great job of repairing the recent damage. It should spend a few more weeks consolidating its recent move and rising toward its May highs before a new pivot point emerges, perhaps if it builds out a proper cup-with-handle type of base. The existing pattern may trick some investors, but the annotated DailyGraph(R) below is not a good cup-with-handle pattern. In a proper cup-with handle pattern, the handle always forms in the upper half of the cup.
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200 DMA is Next Level of Support - Monday, June 19, 2006
A very important technical tool that savvy investors have learned to incorporate in their technical analysis is the 200-day moving average (DMA) line. The 200 DMA line plays a pivotal role relative to a stock's price. If the price of a stock is above its 200 DMA then odds are that its 200 DMA will act as longer term support. Conversely, if the price is below its 200 DMA then the moving average acts as resistance. Obviously, if a technical breakdown or violation takes place on heavy volume it is a more serious concern. Sometimes quiet violations are repaired quickly, without a lot of additional losses. However, the key moving averages are always an important line to watch.
Mobile Mini Inc. (MINI -0.54 or -1.95% to $27.11) closed lower today on below average volume. This stock was featured on Thursday, September 1st, 2005 in the CANSLIM.net Mid Day Breakouts Report (read here) and it went sideways until it violated its 50 DMA with a loss on above average volume October 12th, 2005, then promptly repaired that violation on October 13th, 2005. It made some progress and then consolidated during the December-January period, basically staying above prior chart highs while it spent a couple of weeks again under its 50 DMA line. In February 2006 it got some good volume behind its gains, and it continued rising on heavier volume, even after a 2-for-1 split and an additional stock offering in March 2006. However, cautionary remarks in the May 8th, 2006 CANSLIM.net After Market Report (read here) stated that "MINI developed a well-defined upward trend; and every step along the way, it has continued to post solid quarterly sales revenues and earnings increases. Last Thursday, it blasted higher after its earnings report, but reversed from earlier highs and gave back most of the gains toward the session's close. Note that last Thursday's rally sent this stock piercing through the upper boundary of its current trading channel. Careful analysis of prior winners shows us that when this happens, a stock may be getting too extended from an ideal buy point, and obviously overdue for a pullback. Such is the case whenever a stock breaks above the upper limits of the upward trendline, determined by connecting prior chart highs over a few months' time. And that is precisely what appears to be occurring in this case." Interestingly, that remark was made literally two days after the stock placed its near term top and two days before the May 10th Fed meeting which served as a key catalyst sending the market sharply lower over the past several weeks. Very shortly thereafter, MINI began triggering technical sell signals. The first was when its rather steep upward trendline was breached and the second was when its 50 DMA was violated, while a third sell signal was a gap down and considerable loss on June 5th, 2006. Since then, none of those important breakdowns have been repaired, and now MINI appears to be heading for chart support in the $25-26 range near its 200 DMA line and what might possibly be a retest of important support near its December 2005 high (not shown, as it is somewhat obstructed by the datablock on the annotated DailyGraph(R) below).
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Solid Fundamentals Underpin This Healthy Leader - Monday, May 08, 2006
An upward trendline, by definition, develops as a stock steadily appreciates over an extended period of time. During that period, the stock vacillates between the lower and upper boundaries of trendlines which can be drawn connecting a series of recent highs or lows. In order to confirm the overall health of the stock, the lower boundary should not be violated. Technically, if the lower boundary is violated this signals that the trend is deteriorating and bears are gaining control, making the odds start to favor the possibility of further downside testing.
Mobile Mini Inc. (MINI -0.76 or -2.19% to $33.95) closed lower today on below average volume. This stock was first featured on Thursday, September 1st, 2005 in the CANSLIM.net Mid Day Breakouts Report (read here); and while it consolidated during the December-January period, it later continued rising even after a 2-for-1 split and an additional stock offering in March 2006. During the past few months, this issue has developed a well-defined upward trend; and every step along the way, it has continued to post solid quarterly sales revenues and earnings increases. Last Thursday, it blasted higher after its earnings report, but reversed from earlier highs and gave back most of the gains toward the session's close. Note that last Thursday's rally sent this stock piercing through the upper boundary of its current trading channel. Careful analysis of prior winners shows us that when this happens, a stock may be getting too extended from an ideal buy point, and obviously overdue for a pullback. Such is the case whenever a stock breaks above the upper limits of the upward trendline, determined by connecting prior chart highs over a few months' time. And that is precisely what appears to be occurring in this case. It is most encouraging to see volume dry up as this issue pulls back, but in order for MINI to be considered again as an ideal buy candidate, it needs to spend several weeks building a sound new base. We have not seen any glaring technical sell signals, so this strong performer still gets the benefit of the doubt.
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Light Volume Consolidation Above Support Looks Healthy - Tuesday, December 06, 2005
This company's portable storage containers and portable offices have been in great demand, helping it to generate solid sales revenues and earnings increases in comparison to the year earlier numbers in each of its recent financial reports. It also has a small supply of shares outstanding and it has attracted ownership interest from an increasing number of top-rated mutual funds over a period of several quarters. These are encouraging characteristics to see in a high-ranked stock.
Mobile Mini Inc. (MINI -$0.70 or -1.42% to $48.59) pulled back today on below average volume, but it still is perched well above support offered by its prior chart highs and its 50-day moving average line near $46. This stock was featured on September 1st, 2005 in the CANSLIM.net Mid-Day Breakouts Report (read here) as it was exploding out of an earlier base. Over the course of the past several weeks it has continued rallying, tracing a well defined upward trend.
Testing Trendline Above Other Chart Support - Friday, November 25, 2005
Prior chart highs for this stock in the $46 range, which were a resistance level, now should serve as support level in the event of a trendline violation. The 50 DMA is also a key support level, as always. Any consolidation above these levels would be considered healthy action, but more serious losses and violations on higher volume would be considered technical sell signals.
Mobile Mini Inc. (MINI -$0.81 or -1.63% to $48.84) closed in the lower half of its trading range on Friday. Since featured on September 1, 2005 (read here) in the CANSLIM.net Mid-Day BreakOuts Report it consolidated and briefly violated its 50-DMA, then promptly repaired the technical damage on October 13th. Normally, a healthy stock trades above the 50 DMA and its upward trendline connecting recent chart lows. Whenever a violation of either of those important technical indicators occurs, concern is raised. Prompt support came from institutional buyers in this stock's past, but if ever a stock drops more than 7-8% from your purchase price it is not considered wise to hold and hope for a bounce. This is especially true whenever technical support levels have been breached. The 7-8% is a great guideline for limiting losses, regardless of what the technical indicators are telling you.
