Saturday, December 17

Stock: China Medical Tech

CMED looks like it is resting before a strong move in one direction or the other. In the month of December the stock has quieted down and has found support above its 50 day moving average. But when it does move, will it be to the upside or downside?

The big reversal day in late November showed active sellers overwhelming the momentum buyers and bringing the stock price down to a more moderate rate of increase. But the uptrend is unbroken and a pullback was due. Now that the expectations for easy money have been diluted, the volume patterns show the stock is still being accumulated.

CMED is also listed in IBD's "New Buys of Top Performing Stock Funds" for November, meaning that some smart institutional money is buying it.

Furthermore, at least through the end of the year, we are in a very positive period for the stock market and so we ought not to bet against the upside.

I know what you're thinking: "let's get long the Jan 35-40 call spread for about $1.50 and see what happens".

Okay, good call. You're getting better at this.

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