Therefore, it is unlikely that in the near term the stocks in this sector will establish downtrends. Sector analysis is fundamental to charting. As a rule of thumb investors should always zoom in on stocks by first performing a thorough market and sector analysis.
(NOTE: For this stock I will only analyze the weekly chart and not the daily chart. This is because we are looking for mid to long term investing in this stock. Also, the formations on the weekly chart are so powerful for this stock that they render the daily chart formations insignificant.)
Now lets look at the weekly chart for BOOM, which is showing some remarkable breakout signals.
First, this week the stock broke out of an 18 month old resistance at $23.00 a share. Fueling this breakout was huge volume surge during the last two weeks. This signifies a possible sustained rally in the near term future.
Second, The Relative Strength Index (RSI) for the stock is also showing an amazing bullish formation. Notice that the RSI was hugging the zero line for more than 18 months until last week when it made a sharp turn to the upside. This as I said before is a very bullish formation and should never be overlooked by seasoned chartists.
Finally, notice that since the last low at around $14.00 a share, the stock has increased more than 40% in value. This confirms the stock's ability to make huge consistent moves.
After the current rally there is a possibility that the stock might consolidate or make a correction over the next few weeks. But, I would advise not to wait for a pullback because sometimes these stocks establish a consistent upward rally (see TOD which showed similar formations back on 8th November and it never pulled back).
I won't be able to recommend a sell point for BOOM, because if it establishes a good uptrend: the sky is the limit. Just rely on your instincts when deciding on a good sell point. If everything goes alright BOOM can give 20%-40% profit over the next couple of months. For long term investors the profits can be even greater for a hold period of 6 months to 1 year.
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