By Relmor Demitrius
The main U.S. equity markets pulled back last week, with Friday to Friday closing price comparisons of 1225 from 11/5 and 1199 this last Friday. That is a 2.2% pullback from close to close. This pullback provides an opportunity to examine some low basing stocks on what could be a rebound or flat week in the main markets. One such stock is Sprint Nextel (NYSE:S). Going into this week I see this stock outperforming the market and should trade strong.
Looking at the chart of Sprint Nextel provided below, we notice that the stock closed over the $4 line on Friday. This is a bullish close. The chart also shows the MACD indicator is curving up, indicating a bottoming might be in for this equity short term. You will also notice that the candle action is similar to the other 2 bottoming patterns circled below. Volume had been dropping as the stock tested lower, indicating shares willing to sale were drying up in that range. The stock has historically traded strong after brief dips below the $4 line. Also I noticed that the ADX indicator seems to predate moves to the upside, showing the breakout early. I circled that rise on the second chart for your viewing. Using these signals I believe Sprint Nextel might find some traction this week and trade higher.
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