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home » small cap highlights
Tony Golan
Chief Technical Analyst
StockProfit.com™
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This week I chose to highlight the chart of International Fuel Technology, Inc. (OTCBB: IFUE). IFUE is reversing a long-term down-trend into a powerful new long-term up-trend. The stock is now 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 that IFUE is moving much faster than the S&P 500 and should therefore continue trending higher.
IFUE spent much of the past year in a long-term down-trend, making lower highs and lower lows below a declining 200-day moving average. However, in December and January the stock found support at the $0.16 area, and turned back up. Last week IFUE hit a new 52-week high of $0.89.
Needless to say, when a stock goes from $0.16 to $0.89 in four months without any corrections to speak of, it is overextended. As such, it is not a good time to start new positions. Right now a much better strategy would be to wait and see how the stock corrects when it corrects.
If IFUE corrects slowly and mildly, it will be much more likely to turn back up and resume the up-trend to new highs, which would create a trading opportunity. If IFUE corrects hard and fast, it will more than likely not turn back up and rally back to new highs, meaning it will offer no trading opportunity.
For now, keep IFUE on your radar screen by virtue of its relative strength and how it has been able to sustain an up-trend over several months.
Tony Golan
Chief Technical Analyst
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