This stock has an unusual bottom formation.
It is a base that has settled into a platform than has recently compressed, which tends to indicate a big move up before it occurs.
Chart 1
MDAS gapped down last March, probably on a weaker earnings report. Then it shifted into a long consolidation, and then stepped down into another longer consolidation.
What you should have noticed about this current platform is how much wider it is than the previous 2 consolidations.
The price action has become far more active and quiet accumulation starts in September. This means this is probably going to breakout to the upside sometime in November.
The solid platform defines a bottom even though it is rather unusual.
TechniTrader® RSI/RSI shows that the platform has improving price over price action during the platform and is still improving even now.
Chart 2The TT volume oscillator show consistent volume patterns during the early stages of the platform and a resting pattern at the moment. Resting patterns often occur prior to breakouts.
Chart 3The weekly chart shows that this stock has ample upside point gain potential for a good position trade. It is a young company only a few years old.
Chart 4What makes this extra interesting are the following basic fundamentals:
1. It is under 3 years old.
2. It is in the Computer Software Industry in the Sector: Healthcare Information Service which we know is going to be a big growth sector for the software industry in the next few years.
3. It has institutional ownership around 75%.
4. It is around 10-12 dollars a share.
5. It is widely held by institutions with 150 different institutions holding as of 9/30/11.
6. It has 5 giant funds in the top 10.
7. Revenues have been increasing quarter over quarter and earnings negative is shrinking.
So between the technical analysis and the fundamentals, this stock should move up.
Trade wisely,
Martha Stokes, C.M.T.
Member of Market Technicians Association
Master Rated Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses
http://technitrader.com
MetaStock Partner
©2011 Decisions Unlimited, Inc.
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