New Highs in Loews

One of the rules of thumb that intermediate-term
traders are mindful of is that the longer the base is, the greater the significance
and potential sustainability of the breakout.

Here we have an example of a this in Loews
(
LTR |
Quote |
Chart |
News |
PowerRating)
.

 

In Oct, LTR broke above a 10-week base and traded in a narrow range for eight
weeks. We saw another breakout about a week ago on a range expansion and heavy
volume. The pullback on lighter volume to the round number support at 100 into the the positive
action in the broad market will be viewed by some traders as an
opportunity. 

There are two scenarios that come to my mind. First, another base forms over
the course of the next week and sets LTR up for another breakout. Another possibility
which I’m leaning toward more is some kind of acceleration move on surging
volume. That is, you’d see briefer ranges and more frequent breakouts from those
ranges. I suspect this because the above chart is likely to put LTR on a lot of
radar screens and buying may pick up.

As always, we’ll have to let the market fill in the blanks, so be careful
about jumping to conclusions.

Until Thursday,

Eddie