BOOM Could be a Bust

Dynamic Materials (BOOM), a producer of specialty welded products, is a momentum stock that investors have bid up to unsustainable levels. But the stock has peaked and is on the downside. The upside began on November 12, 2004 after BOOM announced unexpected robust earnings and the stock nearly doubled in one day. Then it made five more upside moves (click on daily close chart to see details) before it peaked on August 5, 2005 at $52.50 before closing the day at $47.10.

The stock is on the downside as the Price Direction Indicator (PDI) and its three components cumulative percent winners, cumulative returns and return per day have turned down.

BOOM has made lots of money for its investors. For the 4,005 weekly buy and sell combinations from January 5, 2005 through September 22, 2005, 89.69 percent made money. The percent returns chart shows the winners in green and the losers in red.

The winners and losers map shows the winners in green and the losers in red.

Related Articles:

Price Patterns - A Bubble Top Is an Extreme Pattern
Price Patterns - Bump and Run Reversal Top Defines Price Bubble
Price Patterns - A Double Top Signals a Downside
Price Patterns - Head and Shoulders Top Has Three Tops
Price Patterns - Triple Top Signals End of Upside Move
Price Upsides Often Occur in Three Stages

Updated February 25, 2008.