Tuesday, April 8, 2008

For Roiking - OPM Looks Fishy

Pat have requested this before but since I saw a bearish chart just like OV, I decided not to post the OPM chart anymore. But with a follow-up request from Roiking, I gave OPM a detailed look.

I have always been fascinated by the box theory of Nicholas Darvas. Tracing back from January 2005, we can see that OPM is in uptrend with boxes forming a pyramid. When all of a sudden, it was disturbed from it's steady rise and zoom up in the first quarter of 2007. It went up, it went down, but despite this volatility, you can still see that there is a box formed whose floor is at .020 and ceiling at .025. The price movement attempted 3X to get out of the box but failed (with each attempt forming lower high but respect the floor of the box).

We also see a symmetrical triangle whose break out can coincide with the box (either floor or ceiling). But I am bearish on this breakout since the 50MA had already crossed below the 200MA (do you see the blue circle that looks like the eye of the fish). Many called this Kiss of Death for it signals a further downturn of the price.

If you still want to buy this stock, you can compute your risk and reward as the floor and the ceiling of the box respectively. The best scenario could be it will just consolidate within the box way beyond the tip of the triangle. The worst: it breaks down from the floor of the box and hit the support line at around 0.016 (or maybe dropped to the next support line at .012)

No comments: