| Bruker BioSciences (BRKR) -- Daily |
Shares of Bruker BioSciences ( BRKR) fell off a cliff in early May, and the bears still have the upper hand. A look at the X-ray maker's technical picture shows a possible short-trade setting up. The stock displayed strong price appreciation from February to April of this year. However, after Bruker met first-quarter targets, shares succumbed to a Bear Stearns' analyst report that the stock was overvalued. Since that time, it appears that buyers have become more cautious. A capitulation phase like Bruker experienced in early May usually leads to a strong reversal that pushes the price back up to the point where shares were trading before the selling exhaustion. In this case, this level equates to about $11.50. Instead, short-covering and reversal traders could only push the price back up to $9.40 before Bruker shares began forming a double bottom. The retest of the $8 support in late May shows that buyers are still willing to purchase weakness, but not strength. It will take some time for the stock to build a base between $8 and $9.50, if the bulls in this life sciences company are to regain control of the daily chart. Right now the stock's near-term support level at $8 is in danger of failing, which could lead to a further decline to the former $7 support. In order for the bulls to regain control of the daily chart, they will need to push the price back above $9.40 on a closing basis. A close above $9.40 would likely cause the bears to cover their positions, and invalidate the developing short setup. But given the lower-volume reversal that occurred in May when the stock bounced off $8 and moved back up to $9, Bruker appears to have a higher probability of at least testing $8 again before climbing above $9.40 on a closing basis. And if the bears prevail, shares could break even lower.
The ideal setup for this stock would be to see the trading range continue to form between $8 and $9.40. Then if Bruker's share price breaks the $8 support, the short entry should be taken at $8 on a return to that price level. At that point the stop would be placed at $9. The profit target would be placed at the $7 support that formed in January and February. If the price breaks $9.40 before offering an entry, this trade setup is no longer valid. Shares closed at $8.84 Monday.
did not set up last week. The short setup is for the price to hit $18.50 for the entry, with a stop at $20.10. The first profit would be $16.90, and the final profit target is at $12.75. If the share price closes under $15 without first offering an entry, this trade setup is no longer valid. Shares closed at $18.08 Monday. PRG-Schultz ( PRGX) moved above the invalidation level of $16.50 last week, so this trade setup is no longer on the Watch List.