I’m always intrigued by huge bases from stocks that are trading near their 52-week low. Normally a prolonged period of contraction leads to a prolonged period of expansion. Iconix Brand Group has been in a range for roughly 11-months, the stock has traded between roughly $6 to $8.75. Previously the stock was in a persistent downtrend since September 2014 after hitting a high of $44. After a massive gap down in November 2015, the stock started losing momentum to the downside and started to trade sideways. This is when the buyers and sellers start to find equilibrium, very simply, the sellers start to run out of inventory and or the buyers are taking all the supply plus a little more.
At the end of the base right before the stock explodes to the upside what you tend to see is the stock hovering near recent highs instead of constantly testing the lower end of the base. This is exactly what is happening right now with $ICON as you can see in the chart below. Based on the price pattern it is obvious ICON has a new set of stockholders that see greener pastures ahead.
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