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Ask The Trader
Wednesday, January 31, 2001

Holding Out For Helix


What is your opinion on HELX? The MACD is moving up and the company will be reporting earnings in February. Does it look like now may be a good time to reenter this stock?


After looking at the chart and glancing at the fundamentals, Helix (NASDAQ:HELX) appears to be a good bet at these levels. The chart formation is what first caught my eye. HELX has formed a pennant over the last ten trading days, which after further analysis, also appears to be a base on base pattern. Both formations tend to be bullish for the same reason. Essentially, the stock has had good buying support (as witnessed by the spike up on 1/17 on heavy volume) and is now digesting its gains. This basing is healthy sideways movement for a stock and enables it to climb higher in step-like fashion, rather than volatile spikes in price that usually result in similar price action on the down side.

Also notice that during the consolidation period, volume has dropped off and the stock has found good support right at previous resistance.

As far as an entry point, I would hold out for a break above the 200-dma, currently residing at $33.00 before pulling the trigger on HELX. The 200-dma often proves to be strong resistance for a stock. By waiting for HELX to rise above it, you accomplish two things. First, by breaching the 200-dma, HELX has proved to you that buyers have the upper hand. Second, the 200-dma should provide excellent support once it is conquered. Also it is a well-known fact that institutional traders key off this level when making buy/sell decisions.

HELX reports earnings on February 21st and has provided investors with four upside surprises within the last five earnings releases. I wouldn't hold out for one this time around, however, since HELX is an equipment supplier to the hard hit semiconductor industry and has more than likely seen a slowdown in business this past quarter. The best bet may be to ride the stock into earnings, but to sell ahead of the actual report.

Good Luck and Have a Profitable Trading Day

Craig Seidler
Assistant Editor
www.SplitTrader.com

 


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