Still Waiting for CAGC China Agritech Inc. to do a Retracement

cagc20100224

CAGC China Agritech Inc. is stubbornly clinging to its recent highs and I suspect it will continue to do so in the days ahead before a more involved retracement.  I am still trying to figure out where to get long CAGC and as mentioned in a previous post, am looking for 19 and change as a possible first entry.  However I would also love to see 15 or 16 and change as well.

I don’t want the general market public to get hurt in a market index mini crash or regular crash, but on the other hand, severe weakness in the market indices in the next 20 or so trading days would probably move CAGC superbly into a more comfortable range between 15 and 25.

CAGC appears to be trading in what looks to me like a broadening wedge formation.  The recent rally of almost 100% has a total of 4 gaps in it !  Absolutely astounding.  I would like to think that at least a couple of those gaps ought to get filled.

The high price of 2 days ago near the 25 level is touching the top boundary of the broadening wedge pattern.  If for some reason CAGC trades ABOVE 25 in the next few days I am still going to stand aside in the belief that it would probably be only an intraday type test of the recent move to 25 and then turn down again.  On the other hand I am sure plenty of people are wondering if they will go long CAGC if it is able to sustain a move above 25.

The most ideal spot to go long CAGC is a touching move near the 50 day moving average which is the blue dotted line in the chart above (still kicking myself for not going long during the most recent 50 DMA test).

So the Game Plan ?

Continue to wait for general market weakness ‘throw the baby (CAGC) out with the bathwater (the general market)’  for an ideal entry point in CAGC between 15 and 20.

P.S.  There is one aspect of market analysis that I still need to do my homework on and that has to do with pattern analysis using fibonacci price points.  There exists a common pattern known as ‘three drives to a top’ and when I look at the structure of CAGC right now in this broadening wedge form, it seems to have a tendency towards that three drives pattern.  The problem is I do not know how to properly tag the pattern as a confirmed three drives pattern, and I do not know if these three drives patterns must have a volume component to them that confirms the pattern.  When  You look at the two solid red horizontal lines in the chart of CAGC above, the price has clearly taken out the previous swings on confirmed volume.  So to me the uptrend appears entirely valid.

Posted in China Stocks, Stock Setups
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