A Magical Base

A Magical Base



Vocaltec Communications ($CALL) is now trading above an 8-month base that has kept the stock between $6.75 and roughly $8.50. This is after being in a relentless downtrend since March of 2014, that probably wiped out a lot of holders. I’m always intrigued by huge bases because normally a prolonged period of contraction leads to a prolonged period of expansion. The base tells you that the buyers and sellers have found an equilibrium.  Slowly but surely as the stock continues to trade sideways, the buyers start to take control.  By the time the finally breaks-out to the upside, it usually does it with a whole new set of stock-holders.

Vocaltec now is trading above its intermediate and long term moving averages (50 and 200-day moving averages), something it has not done since April of 2014 (character change).  As you can see from the chart below the 50-day moving average acted as resistance for months, every time the price hit the 50-day moving average it was turned down.

These type of bases, after they break, tend to lead to decent moves to the upside.  Just recently $CALL broke above its 8-month base, retested the top of the base by pulling back, now the stock is back above the base (successful retest).  At current levels, CALL is offering a decent risk reward ratio if one were to put a stop at $7.80, our first target is $10.50.


My name is Frank Zorrilla, a Registered Advisor in the State of New York.
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