ASTM: A Dem In The White House?

President Bush hasn't been particularly friendly to the stem cell stocks, but given the prospect of a Dem taking over the White House (we might even be saying MADAM President), it seems worth looking at these stocks now since the market is a mechanism that discounts the future, usually said to be six to nine months forward.

ASTM is stock that could benefit from that prospect, even if only due to the "perception" that a Democratic White House would be more friendly, rather than due to any actual results. Stocks often have very good rallies on "perception" alone, even if there's nothing, fundamentally, to support the rally.

Witness: Internet stocks that ralled hundreds of percentages, and more, but never earned a dime. Many of them went belly up, but not before people made a ton of money playing them.

A friend of mine told me just yesterday that she had the good fortune to sell CMGI at the top. That was the "internet incubator" stock. Incredible rally "on perception."

In addition to the "internet incubator" stock, it also should be dubbed the "Humpty Dumpty" internet stock, because it "...had a great fall...and hasn't been put back together again." LOL.

On to ASTM:

Technically, ASTM broke down from an Ascending Triangle that put at least a return to the bottom of the pattern, 1.10, IN PLAY, and possibly lower, to 0.86. Thus far, ASTM has Double Bottomed at 1.10 and 1.08.

Short-term, it has broken out above a weak-looking Inverse H&S pattern, but that's a step in the right direction and the fact that it's done something bullish, if only short-term, suggests that the Double Bottom has a good chance of holding.

I've drawn the Double Bottom, or "W"-Bottom at the top of the chart in purple. The key to the pattern is an upside takeout of the middle of the "W," which is 1.67, and have shown what upside target would be IN PLAY.

(Click Directly On The Chart For Better Viewing)




Long-Term Chart Review:

Pattern #1: The Double Bottom (which ended up being the Head of a Bullish Inverse H&S Pattern).

The width of that pattern is one year. Nice. The target of 1.10 that was IN PLAY from the breakout was exceeded by quite a bit in percentage terms. ASTM rallied to 1.83

Pattern #2: The FOUR YEAR Bullish Inverse H&S pattern.

"The bigger the base...the better the breakout," and was it! ASTM went on a 3-week upside screamer. A 200% rally! It was all over right there, but what a nice ride for anyone who caught it (I didn't). The upside target IN PLAY also was exceded by a wide margin on this breakout. Great example of how expolsive these pattern breakouts can be.

Pattern #3: Bullish Falling Wedge (pattern in purple, labeled #1 thru #4)

These usually aren't very good patterns. When they finally breakout, it turns out only to be a "break above" the pattern, as this one was in ASTM. There was a rally, but it never even got back to 1.88-1.90 resistance within the Bullish Falling Wedge.

The "good news" though, is that ASTM has spent about 1¼ years forming the nice Double Bottom base, which only is bullish if ASTM can break out above 1.67.

IF it does, past breakouts in this stock have resulted in the upside targets being exceded, and on a print of 1.68, EVERYONE who has purchased in the past 1¼ years finally will be sitting in a winning position, and they might not be real anxious to sell at that 2.18 target that would be IN PLAY since they've held it this long, and they'd be holding a winner.

Short-term, neckline support is 1.25. Longer-term, 1.68 is the technical breakout.

(Click Directly On The Chart For Better Viewing)