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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 Energas Resources, Inc. (OTCBB: EGSR). EGSR 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 well above the 25% threshold line, indicating the up-trend in EGSR is very strong and the stock should therefore continue to outperform the S&P 500.
EGSR spent much of the past year in a long-term sideways-trend, swinging above and below a flat 200-day moving average, but was unable to sustain a trend in either direction. However, in late-May, EGSR hit a low of 0.03 right at the 200-day moving average and started to trend up. About ten days ago, EGSR hit a new high of 0.18.
The strength of the up-move in EGSR indicates that when EGSR does pull back, it will be a slow and mild pullback which will result in a higher low and be followed by a turn back up to resume the up-trend to higher highs.
How high EGSR will trend up, if at all, is up to anybody's guess. However, the strength of the initial move up and away from the 200-day moving average indicates that there is more in store for EGSR and that its up-trend is just starting.
With EGSR hitting a new high recently, then moving sideways since, this is not the right time to establish new positions. A much better time would be at the completion of a slow, mild correction against the up-trend. Until such a pullback materializes, keep EGSR on your watch list.
Tony Golan
Chief Technical Analyst
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