ProAssurance Corp. (PRA -$0.98 or -1.97% to $48.78) negatively reversed from an early surge that had initially lifted its shares into new all-time high territory (above $51) on Tuesday.  A negative reversal (or outside reversal) is a technical term which is defined by a stock moving out of earlier positive territory, erasing gains and ultimately closing lower on the day.  The negative ramifications of this type of behavior are greatly compounded when losses are accompanied by massive volume. Unfortunately for the bulls, a negative reversal is exactly what transpired on Tuesday for PRA.  Nearly 476,000 shares traded, an amount more than 3 times its normal daily turnover.  What also adds concern is that the stock ended the session near its intra-day low, and the resulting loss was accompanied by the highest volume of any day in a year.

This issue is still modestly above its $47.82 featured price when it first appeared highlighted in yellow in the November 2nd, 2005 in the CANSLIM.net Mid-Day BreakOuts Report (read here).  However, it is important to note that Tuesday's action paves the way for further downside testing, and chart support is in the range of prior chart highs near $45-47.  This example also underscores the importance of making purchases close to the pivot point, not more than 5% above it, where the risk is greater that a normal pulllback will prompt you into selling.  Investors should also realize that today's added volume and volatility in this issue were a direct result of the company's latest quarterly financial report released this morning.  The company showed a +43% improvement in earnings per share over the year ago period, well above the +25% minimum guideline.