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CMG broke out on an increase 125% over the 50dmav. on the follow through day. There was a base reset during the week of 10/30/2009. So, we are looking at a 2nd stage base.
CMG chopped back and forth but still rose during this summer's rough market and then took off out of a cup with handle base. The steady tight accumulation for week's following is something to look for. then the breakout on earnings several weeks ago even added to that.
Note the big volume clues in the months before the latest breakouts. The second stage base was tight and well constructed with nice shakeout toward the end of the cup. If you drew a line through the weekly closes you would see how tight it really was. RS line at new highs. You could have even bought on 5 weeks up in a row of the bottom of the 2nd stage base.
price targets come out to $304-349, the latter if you assume PE expansion.
ohh , and did I mention it has great fundamentals!!
Thanks for the great post, emallory. I'm a believer. I own CMG and am holding on for the ride.
Dave
Thanks DavidM. I suspect CMG will push to the upper channel line over time and ride back and forth between it and the lower part of the channel or the 50d or 10w.
That last base you have highlighted was a cup and handle that IBD had call and a classic one at that. This stock has such a low float, no wonder it is in the nose bleed seats. On another note can I ask how you were able to add text to the chart. I cannot from the markups box
Brian, the text is added from the small annotation pop up. It has a letter "A" in it. Click on that and draw yourself a text box to populate.
-Tom
Actually, according to MS, the float and outstanding shares are extremely close at 30 and 30.9 M shares respectively.
additional note, 13 weeks, a full quarter of up weeks -of accumulation. This is a stock to hold closely and give it adequate room to move - letting sell rules dictate your exit. Use WJO's.
BIDU did a similar thing twice in its run since 3/2009.
Can you elaborate on how you came up with the price target?
yes, the short answer is to look on page 167-8 of HTMMIS, updated fourth edition.
to find the starting point you need to find the first stage base. Since, a previous base was undercut on the 10/30/2009 week. I know the starting point. looking back a year to add up the earnings off of the chart for MAR, JUN, SEP, and DEC 2009. I got 3.95. With a price at the breakout of 92, then the PE was 92/3.95= 23.3.
Now, I know the initial PE. Then looking out to 2011 earnings estimate of 6.52 Earnings est. x PE @ breakout = unexpanded price target. If expansion is assumed at 100-130% then multiply the unexpanded by 2 [for 100%] or 2.3 [for 130% expansion]. This yielded 304-349. Big questions , will expansion occur ?
I am also looking for a definitive answer on the base reset considering a base-on base pattern.
Let's see how this week closes. Will support come in to pick it up off of the lows ?
So far we have an Island top in CMG. let's see how this week plays out.
But, since it hasn't touched the 50d once since its breakout. I'll give the Island top less credence ...
Wow, looking back a year. this played out well.