XING: 3 BULLISH PATTERNS

In early January, 2007, XING had put in nested bullish patterns when Dutton upgraded the stock to 20.23, on January 16. The stock absolutely exploded to the upside, and all of the bullish pattern targets got MADE. The last target, 19.05 was exceded on the final push to 19.94. Dutton made a great call. It's a shame that they didn't call off their STRONG BUY recommendation.

"Take profits when targets get MADE."


From the 19.94 high, XING got whacked nearly 62%, to the recent low of 7.65, where it put in a Double Bottom.


Bullish Pattern #1: The Double Bottom (7.78 and 7.65).


The middle of the "W" (or, Double Bottom) is 9.98. The pattern is questionable because it has such an extreme left translation, with the high coming in immediately after the initial low of 7.78, so we'll have to see if the 12.18 target IN PLAY gets MADE, or not.


So far, the high on this rally is only 11.94, just shy of the target, but that particular number is a key to Bullish Pattern #3, as we'll see in a minute.


Bullish Pattern #2: The Channel Breakout (pattern in blue)

When a stock "breaks out" above a steeply downward sloping channel or trendline, that often is simply a "break above" it, not a true breakout. The stock ends up faltering, "walking down the trendline," and moving to a new low.


For validation of a breakout, it's good if we can get a successful re-test of the top of the pattern, and we've gotten that for the past three sessions, which is good. XING closed smack on top of that channel yesterday. It needs to stay above it. If the stock closes back below the channel, I consider that to be a false breakout, unless/until it gets back above the channel.


Bullish Pattern #3 - The Bullish Inverse H&S (Green circles)

The first data point on the neckline was 11.95. The second data point is last week's 11.94 high, so we can see that Pattern #1's target of 12.18 not getting MADE wasn't all bad...we've got a very pretty setup here for breakout above the 11.95-11.94 neckline that would put a target of 16.10 IN PLAY.


Math for the target:


14.94 high - (I always use the more conservative of the 14.95-14.94 neckline date points)

7.78 low - (the more conservative of the 7.78 and 7.65 lows)


11.94 - 7.78 = 4.16 points added back to 11.94 = Target: 16.10 IN PLAY


Technically, it's going to be difficult for that target to get MADE because we've got immediate overhead resistance starting in the low $12s, which was the Rectangle breakdown in July, and then almost all of the trading for the past year is above that level, so there's a big overhead supply of sellers, and we've only got a two-month base from which to launch a rally.


For that reason, I'd shave the target on a breakout above the 11.94-11.95 neckline, but XING's got a chance here, particular on a heavy volume earnings-driven rally.

(Click Directly On The Chart For Better Viewing)