|Strayer Education: A Chart View - TheStreet|
|Written by L.A. Little|
|Wednesday, 15 December 2010 07:45|
L.A. writes a piece weekly for TheStreet.com and this week's article is reprinted here with permission.
Strayer Education offers for profit education programs through traditional classrooms and the Internet. They have been caught up in the selling, like other names in the sector, as a lot of bad press and some disappointing earnings have hammered these stocks. Here’s the long term chart which shows both the damage and the tentative signs of a possible turn.
In this chart, the carnage is clearly visible. You have a stock that dropped more than half its value in less than a year. That is pretty severe. On the bright side of the picture, the potential that a long term bottom may have been put in is a standout possibility. I say that because if you look at the chart closely you can see that the lower low registered in October of 2010 has lighter volume than the plunge month of August. The comparison of the two bars shows prices pushing lower but being unable to close lower. That is positive divergence. It is not a lot to hang your hat on but it is a positive. What is needed now is a retrace back to the August lows and the inability of prices to push lower with much lighter volume. If that happens, it will tell us that the sellers are likely done on a long term basis.
Another slight positive is that although the trend on this time frame is bearish, it is suspect bearish - not confirmed.
Moving to the weekly chart where most swing trades occur, the picture here is not as positive though. To start with, the trend is confirmed bearish. Additionally, on this time frame a lower low was made with higher volume. Finally, there is a gap down that will likely continue to suppress any price advance if price can reach the $180 area again anytime soon. There are just too many holders of the stock who are probably waiting to escape at those levels still.
With Strayer, there is the possibility that the stock has found a price level that will hold over time. The problem is that the odds of it rising appreciably any time soon is not great any time soon. That creates a range and from a range trading perspective it might not be a bad trade for the next few months selling the top (the gap down area around $180 and buying the price range between $125 and $130. Any other trade doesn’t seem to make a lot of sense right now with these education stocks in general.
Until next week, just keep trading the charts!
|Last Updated on Thursday, 23 December 2010 06:58|