Small Cap Highlights
ERHC Energy, Inc. (OTCBB: ERHE.OB)
For
Monday, March 31^st, 2008

Tony Golan
Chief Technical Analyst
StockProfit.com™

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This week I chose to highlight the chart of ERHC Energy, Inc. (OTCBB: ERHE). ERHE is starting a strong new long-term up-trend. The stock is making higher highs and higher lows above a rising 200-day moving average (the red line on the chart above). Relative Strength Differential (RSD), our proprietary indicator for selecting stock in super-strong up-trends, is way above the 25% threshold line, indicating ERHE is outperforming the S&P 500 by a wide margin and is therefore likely to continue trending higher.

ERHE spent much the last year in a long-term down-trend, making lower highs and lower lows below a declining 200-day moving average. This all changed in early March, when ERHE hit a low of 0.19 and took off powerfully, hitting a new high of 0.52 last Friday.

Along the way, ERHE also closed above all the highs going back to December 2006. ERHE made this entire move without any pullbacks at all. This means that the stock is overextended, and that it is very risky if not downright stupid to initiate new positions here. The technique for initiating a new position in an up-trending stock is always the same: wait for a mild, slow pullback from a new high of at least three trading days, followed by a strong turn back up. If such a slow, mild pullback never materializes, so be it. If one does materialize, it will mean a high-probability entry opportunity. Keep an eye on it.

Tony Golan
Chief Technical Analyst

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