Thought I'd use my one post for the day to provide the definition of a consolidation period. It doesn't indicate we are in a downtrend, but quite the contrary. The fact that the stock has been trading within this channel for almost 3 weeks, volume continues to decrease but yet the price support above .20 has continued to hold up nicely means only one thing...The .20 support base is a BEAST! The pps just got a little out of control (ie. overbought) and the stock price is just adjusting to where it should be...and how about that. Where it's adjusting is right on top of the trend line (20 DMA)
So, 3 weeks of consolidation with a pinpoint tip of the bull flag at just above the .20 pps mark means that there has been a ton of consolidation in the .20s. What does that translate to? A new base for the next leg up! Unless of course everyone is ok with selling their stock at a loss with the 1st qtr 2012 financials due out in just a little over 2 months. LOL Hmmmm. I believe I'll take the small risk considering the huge reward.
Oh, and I remind you to go back and take a look at the chart between the dates of 11-27 January, 3-6 February and compare with 16 February-2 March!!! LOL...And just for kicks, go back and read the board comments during those times of consolidation. I think you'll find them eerily familiar!!! Then I want you to take a look at the entire month of November 2011...You see all of that indecision to sell...even thought the stock had lost terribly as of late...there were still a lot people holding their shares at that price between .26 and .44. Exactly where we are encountering this resistence. If you look at the big red day during our last big bear attack (Which by the way even the low of the day was still .06-.08 cents above the uptrend line.), and draw a line from the low of that day to our current low we are still in an uptrend. If you look at the 20DMA it falls right at our current pps. Why am I saying all of this? I say it because this consolidation period is healthy...it was necessary to bring the pps back down to where it is supposed to be (The trendline) and it is healthy because it has established a new base for the next move up. Consider this...There are still holders of this stock in the $2 plus range. That says to me that WE ARE NOT EVEN CLOSE TO WHERE THIS STOCK IS GOING BACK TO.
Definition of 'Consolidation'
In technical analysis, the movement of an asset's price within a well-defined pattern or barrier of trading levels. Consolidation is generally regarded as a period of indecision, which ends when the price of the asset breaks beyond the restrictive barriers. Periods of consolidation can be found in charts covering any time interval (i.e. hours, days, etc.), and these periods can last for minutes, days, months or even years. Lengthy periods of consolidation are often known as a base.
Consolidation is simply another description of a trading range and the complete absence of a trend. These periods can make for frustrating trading if you are looking for a large price move, as price remains range-bound within a consolidation area. Consolidations often follow uptrends or downtrends, and are a representation of a stable market which lacks emotion ahead of the next significant move in prices. Consolidations are healthy in stocks which have just made large price moves, and help to alleviate the overbought or oversold readings of indicators.
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