As my comment in base and breakout GMST 22.12.06 post, my contributions to this blog will mainly be related with technical analysis. In this post I present a trading channel formed by LAB (LaBranche & Co. Inc.) from September 2006 until now. Altough this stock received a very bad evaluation from some analysts (see for example http://finance.yahoo.com/q/ao?s=LAB), in my opinion we have a lot of reasons to stay long in this one.
Yesterday and today the price emerges from the bottom of a very interesting classic trading channel, as we can see in the chart. The MACD and RSI have a bull trend, the RSI crosses the 50 line and we have the MA50 has suport (green). Altough some risk is involved because we have some bear long term trend, in my opinion a long position is the right choice, with a stop loss at 9.90 close to the MA50 suport and the bottom of the trading channel.
And there is one more reason, and this time is a fundamental one! The price/book for LAB is only 0.75! A very rare number. A strong evidence that is very difficult for the price to continue to go down.
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