SVA - THE ASCENDING TRIANGLE BREAKOUT

Two weeks ago, SVA broke out of a 14-month Ascending Triangle, which put a target of 5.83 IN PLAY. Math for the target:

3.83 - High (Use the more conservative of the 3.85 and 3.83 Highs)
1.81 - Low

3.83 - 1.81 = 2.02 Points, added to the breakout above 3.81 = Target: 5.83 IN PLAY.

We had several aberrant trades at Thursday's open, so it's difficult to know exactly what this week's high was. Some services show a high of $9.50. Reuters shows $8.33. Regardless, we came very close to the $5.83 target.

Generally speaking, targets after a 14-month pattern breakout aren't achieved in just two weeks, like this one was in SVA. And, the rally was on very good volume for this stock. That's very bullish.

A period of consolidation here would be healthy for the stock, otherwise, it's in danger of going parabolic, and those usually don't end well. SVA had a parabolic rally in the Autumn of 2005 on the left side of the chart. That rally ended in a blowoff top, at 7.92, then a miserable 77% nine-month decline, to 1.81, ensued, which is typical of parabolics. More often than not, they end in a Parabolic Return to the origin of the parabolic, or have a very sizeable correction at a minimum.

SVA has closed higher for seven weeks in a row, and it's up well over 100% during that period. I expect higher prices for SVA down the road, but again, some consolidation soon would be very healthy for the stock, structurally.

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