Upgrade your membership to see all of the expert analysis we have published on RAVN now!
Technical Weakness Prompts Concern Ahead of Earnings News - Wednesday, November 16, 2005
Poor action ahead of earnings news definitely prompts concern, especially in this case because it amounted to at least two technical sell signals - losses on high volume leading to violations of its 50 DMA and its upward trend line. This stock also has failed and fallen back into its prior base, negating an impressive 10/31/05 breakout. Remember, the best advice for CANSLIM investors is to always limit losses at 7-8%, so follow the rules!
Raven Industries Inc. (RAVN -$2.34 or -7.73% to $27.95) sliced through its 50-day moving average (DMA) line today, falling on nearly 5 times its average daily trading volume. This stock recently broke out of a solid base, and it has been a solid leader in recent months. RAVN was featured on 10/31/2005 in the CANSLIM.net Mid-Day BreakOuts Report (read here). It will release third quarter 2006 financial results pre-market on Thursday, November 17, 2005. Prior chart support for RAVN is in the $26-27 range, near previous chart highs that were once a resistance level. Earnings news is known to create extra volume and volatility! If this stock is going to ultimately work out to be a great winner, first it would need to rise back above $31,32,33, where investors would have plenty of chances to recognize it returning to strength and an opportunity to possibly buy it again. One other reason for concern could be the company's decelerating sales revenues and earnings growth rate, as each of the past few quarterly comparisons has come in at a smaller percentage increase. It would be more encouraging to see improved growth reported in the latest quarter.
Jolt Puts Fresh Breakout in Jeopardy - Tuesday, November 01, 2005
Raven Industries Inc. (RAVN -$1.10 or -3.50% to $30.34) broke out on above average volume on Monday, but it promptly reversed on Tuesday. Those with an ownership interest should be sure to mind their stop losses at 7-8% below their cost and always follow proper sell discipline in the event of a technical failure. RAVN's above average volume pull back and weak close near today's lows is not the type of action typically associated with leading stocks. After breaking out, leading stocks will more ideally pull back on below average volume to re-test their pivot points. However, even this kind of healthy consolidation usually occurs several days after the breakout.
It would be considered a sell signal if it were to drop more than 7% under the pivot point, so anything under $28.90 would definitely trigger disciplined investors' sell rules. It was encouraging to see lighter volume today than that which had accompanied the breakout. While the action today gives cause for concern, this high-ranked leader still has a reasonable chance of working out to be a big winner for those who can be patient. However, if prices fall below the pivot point, the recent bullish breakout would technically be negated, arguing that lower prices would be more likely to follow.
