Two weeks ago I penned some bullish thoughts on Amarantus BioScience, Inc. (OTC:AMBS). In simplest terms, I liked the way the stock had spent some time in consolidation mode, and looked like was testing the upper boundary of that zone - I figured a breakout from AMBS was imminent. So I waited... and waited.... and waited. Nothing. A week and a half later, I let the stock fall off my mental radar. As it turns out, I should have been a little more patient. Amarantus BioScience finally did the deed yesterday, and is following through today.
Just for a little perspective, a healthy, long-loved rebound effort from a stock should take a long time, and be (generally speaking) U-shaped. V-shaped reversals tend not to last, because they're born from - and produce - volatility, which spurs more and equal volatility. At the same time, many good rallies start when a stock is flung out of a fairly narrow and somewhat-lengthy period of sideways movement between two very finite support and resistance lines. AMBS had both of those things going for it when I last looked at the chart on the 13th.
The chart below tells the tale. Amarantus BioScience, Inc. fell rather sharply and decisively between April and May, forming the descending part of the 'U' shape. In June, the floor at $0.027 as well as the ceiling at $0.0439 were both defined... a support/resistance range that would last through mid-August. That's the bottom part of the 'U'. As of yesterday, AMBS has edged its way above $0.0439, starting the formation of the last up part, or the ascending piece, of the 'U'. The odds of more upside from here are tremendous the market will subconsciously work to complete the pattern.
It's not just the break above a key resistance line that's making Amarantus BioScience shares so buy-worthy today though. It's also the fact that the stock's also hurdled the 100-day moving average line (gray) in the meantime, and that the 20-day moving average (blue) has slowly crossed above the 50-day line (purple) within the past week. With these gentle crossovers, the trend has turned bullish in multiple timeframes.
Throw in the fact that volume has been growing as AMBS has been on the rise since the middle of the month, and what you have is a very, very bullish case. Though we'll still likely see some daily ebb and flow, the undertow is pointing is decidedly pointing us higher. Time to take that swing.
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