Decision Diagnostics Corp (DECN)

[VistaViewer]

This AM there was a minor argument about the OPEN GAP that formed on Monday...

...and whether it WILL or WILL NOT be closed at some point.

So, since I happen to be a fairly advanced student of TA (Technical Analysis) and enjoy knowing about these things, I thought I might comment on it, purely for your educational enjoyment. But I re-emphasize that I am mainly a student and NOT a TA GURU.

The market "conventional wisdom" based on TA, and going back decades, says absolutely YES, that gap will (must) be filled at some point, if for no other reason, to "prove" the statistical foundation of the TA, so to speak.

However, the filling of this gap does NOT have to happen tomorrow, next week, month, or year. It could be a very long time before it happens. But the lengthy history of TA indicates that, in fact, it WILL happen at some point. However, it is nothing to be fearful of because it is NOT an imperative that needs to happen in the near term. From the perspective of time it is a completely open-ended situation. And we might even see, YET ANOTHER, upside gap form, depending...

And again, from the TA perspective, there is something really interesting going on here that is related to that gap and it is specifically the current relationship to the Upper Bollinger Band.

If you take a look at this chart you will notice that the Bollinger Bands, drawn in green, above and below the 200MA shown in red, became very tight over a period of several weeks, culminating last Friday. This configuration is, of itself, a fairly reliable indicator that the PPS is going to BREAK HARD either UP or DOWN at some point. And sure enough, it did exactly that:

http://stockcharts.com/h-sc/ui?s=ISCR&p=D&yr=0&mn=3&dy=0&id=p26096442189

I take no credit for what happened here, but I have been on-the-lookout for the 10Q for a week, because CFO Berman told me it would be out about Nov15 and that it would be good (more profit). I am the guy who first spotted it and posted the link early last Monday. Or did you not notice?

Within an hour after I posted that link to the 10Q, the PPS launched hard to the upside. Note that about 1/3 of the day's trading was ABOVE the Upper Bollinger Band. Following on Tuesday and Wednesday where VIRTUALLY ALL trading was above the UBB. And again today we traded MOSTLY above the UBB. This situation has created a vulnerability in the price trend that MUST be addressed based on the TA.

When the chart speaks to you, YOU SHOULD LISTEN!

The problem that has emerged is the potential for what is called a Fibonacci Retrace. Typically, they usually have a magnitude of either 33% or 66% from the end point number, which in our case would be the current highest PPS of 16 cents even.

So a 33% Fib Retrace from the top would take us to about .10 and guess what? Today we have traded down to .09 so this smaller FRT pattern has already taken place. The larger FRT of 66% would take us down to about .05 and IF it happened, it would FILL THAT OPEN GAP. You see where I'm going with this? Everything that is going on here can be explained and understood via an understanding and appreciation of the TA. It ain't Rocket Science!

The short answer of all this is that this minor sell off to .09 that just happened before the close is actually a VERY GOOD THING. If earlier in the day, not so good. Essentially, it has reduced the possibility of the larger FBR taking place. Earlier in the day I was becoming a little worried and my finger was on the trigger, safety off. But seeing this sell off late in the day has relieved my anxiety somewhat and I am still holding strong and looking for even higher prices near term.

Other folks who look more closely at the FA (Fundamental Analysis) are saying that the fair market value of this stock is much closer to 43 cents. So there is ample reason for this to go much higher. Given the emerging Health Care legislation, this company's two qtrs of increasing profit, I would venture a guess that InstaCare is on track to make $20 to $25 million revenue in 2010. I don't think this is an unreasonable prediction.

So, I am only bringing this TA discussion of the Bollinger Bands and Fibonacci Retrace to this forum so that HOPEFULLY others won't become disillusioned by the volatile PPS movement and ultimately get "spooked" and dump out way too soon. I sincerely hope it will serve this good purpose.

OK, the technical presentation is now concluded, and I will now get down off my soapbox. But feel free to ask your TA questions.

And one last thing... if anyone on the IHUB forums ever tells you that TA doesn't work on penny stocks, you tell them VV knows better. TA works just fine, but you have to know how to use it; that takes some work and is not for lazy people.

Good Luck to All Longs!

VV