QXM: Back Inside The Wedge

(Click On Charts To Enlarge)

Chart #1: We last looked at QXM when it broke down at 6.60 below a 3-month wedge (pattern in purple) on March 4, which was confirmed on March 6 after a one day rally failure, back inside the wedge. Breaks like that usually indicate lower prices, and that was the case here. QXM fell an additional 16% to a post-IPO low of 5.50, on March 20.

Chart #2: Rather than go into freefall on the downside QXM, like XING, formed a small Bullish Inverse H&S pattern (black circles) that put a target of 7.19 IN PLAY. Militating against making the target was the fact that, immediately after breaking out of the pattern to the upside, QXM had to rally smack into the broken wedge resistance (pattern in purple). But, April 3 was a close back inside the pattern. April 4 was a rally, then a sizeable giveback of the gain (understandable, given all of that resistance). And, on April 7, although volume was a weak 164,000 shares, the 7.19 target got MADE. The high on the day was 7.29.

Chart #3: QXM is short-term bullish and now in The Neutral Zone, trading back inside the Purple Wedge. What would turn this chart bullish? Well-ll, an upside takeout of the purple wedge might be nice ;) The trendline at the top of the pattern is validated resistance, meaning that it was tested (almost exactly, on February 4, at 8.89), and failed. When a validated trendline gets taken out (up or down), that usually has some significance. Not always. But, the manner in which it is taken out can give of some clues. If, for example, some morning QXM should be called higher right at that trendline, say on good earnings, with volume coming in at the open, there's a ver-ry decent chance that QXM could "Gap And Go" like it did on October 9, 2007. That trendline comes in today, April 8, at 7.7139. The slope is 0.0269, so that amount is subtracted each day.

In the interim, on any selloff in QXM, we'd like to see the bottom of purple wedge hold as support, telling us that "last time it wasn't support, but this time it is!"