The chart above is a weekly chart for CRME. Some important features on this chart are:
1. The stock recently touched support at $4.7 (marked with a black line) and then jumped up. Notice that this support used to be a resistance back in 2009 and for the most part of 2009 the stock wasn't able to defy this resistance (despite several attempts). This clearly shows that the support at $4.7 is strong and it is not likely that the stock will break down below this support in the near future.
2. The other thing to notice is that after hitting this support the stock went up like fire. In just last week alone it increased in value by almost 20%. Fueling this jump was a huge volume surge last week as can be seen on the chart. Volume surge indicates that this new potential uptrend is not going to end soon.
3. The stock has been in a sharp downtrend for more than 4 months now; indicating that an upward move is now long due.
Now let's look at the daily chart for CRME. This chart is signaling a good bullish move starting most probably next week. The key points to notice are:
1. The most recent downtrend started on August 9th and continued with lower lows till roughly 9th November. The next low on 5th December was higher than the previous low: indicating that the sellers are no longer in control of the stock.
2. During the downtrend the stock tried to defy its 50 day moving average twice(indicated by purple circles on chart), but failed both times. But, then last week it successfully defied this moving average(shown by green circles on chart). Also notice that during this breakout the volume increase was huge, signaling a good bullish move is in store ahead.
3. Notice that the RSI for the stock has remained below the zero line for more than 4 months and just last week it made a sharp and decisive move into the positive territory. This is a very strong bullish indicator, it was introduced by Stan Weinstein in his infamous book "Stan Weinstein's Secrets For Profiting in Bull and Bear Markets
".CRME is a very strong buy right now. I believe that it will establish a good uptrend now and within the next month or two it will rise up to $8.0-$8.5 a share giving a 30%-40% profit.
(But, keep note that CRME is a biomedical company and like all biomedical companies it's stock is very sensitive to negative news about its products and therefore understand this risk before buying CRME.)
NOTE: As a follow up to one of my previous picks "Citigroup" on November 26th: I believe that now it is a strong buy for long term investors who are willing to hold it for a period of 6 months to 1 year.
