CEMJQ

Analysis here differs from the trend model that applies to the straightforward growth stories of consistently profitable corporations. In navigating the Chapter 11 reorganization process valuation becomes a particularly speculative enterprise, resulting in significant disruptions of the general growth trend, as market participants are driven by accelerated gain/loss expectations and the according profit-taking/loss-mitigating moves.

The December low at .46, following new post-BK highs near 1.50, is therefore easily recognized as in line with a conservative trend connecting May and July lows. This I take to be the floor in a growth cone that has as its ceiling the August U bottom, therefore discounting the significance of the last move which pushed this stock over a dollar once again.


For investors stepping in at this point, therefore, two alternative considerations hold: a) In a worst case scenario (with the long-term trend captured by the bottom of the cone) this stock may well trade around a dollar for some time to come (basically throughout the spring), or b) in the "top of the cone" scenario we are right on trend and will probably overshoot for a while before retracing. Important pointers will come from the stock's behavior around the Fibonacci-derived 1.17 trading level. Ideal from a stable trend perspective would be a steady progression and consolidation around that level, which would encourage a strong push toward the next significant level at 1.60. Instread, you will likely see a repetition of the prior post-BK high move, followed by renewed correction towards the channel defined by the conservative valuation cone.