NEW YORK ( TheStreet) -- Encorium Group, Inc. ( ENCO) designs and manages clinical trials for pharmaceutical, biotechnology and medical device industries primarily in Europe. As you would expect, all the sovereign debt issues in Europe aren't exactly helping the stock push higher. There have been, however, definite signs of strength that are worth taking a look at.

Here on the monthly chart, we can see that the resistance doesn't really kick in until the $10 to $12 range and then again at $15. That means there is plenty of upside room if ENCO can catch fire again.

And when speaking of catching fire, take a look at the weekly chart that gives us an intermediate term timeframe perspective. On this time frame we can clearly see a couple definite signs of strength. There was one back in September and again in April of this year.

Now, it is the case that ENCO has a large short number of shorts as a percent of the float and these spikes that fade quickly are likely the result of intense short covering. Nevertheless, a trader can use that knowledge to realize that they have to peel off profits into strength rather than holding and hoping for the home run. You don't have to sell everything, but selling 30% or 40% of your holding into strength is good money management.

It is on the daily chart that we can get a better picture of what is currently happening with ENCO. The first spike higher left a high volume swing point at the $5.15 level. From there, prices came all the way back down to test the lows. That is very common on a large spike such as this that comes "out of nowhere." Then the bargain hunters went to work and pushed it to new highs but on suspect volume. That created the suspect bullish trend.

As we know, that type of a trend typically results in a retest of the swing high bar that was suspiciously surpassed. True to form, ENCO did exactly that and came all the way back down to retest/regenerate.

That brings us to the current environment. Looking back at the weekly chart, there are two areas of support that can be bought. This is a channel trade at this point and in that type of trade, you buy the lows and sell the highs. For the more careful trader, you would only be a buyer, not a short seller as the trend has changed from confirmed bearish to confirmed sideways on the intermediate term chart. Thanks for listening and until next time, keep trading the charts!

L.A. Little, author, professional trader and money manager, writes daily on www.tatoday.com, a free educational site for traders and investors. He has been featured in numerous publications and is the author of Trade Like The Little Guy.

His background includes degrees in philosophy, computer science, computer information systems and telecommunications. With a trading philosophy centered on capital protection first and the accumulation of consistent gains over time, L.A. espouses a simplistic technical approach to trading the markets that is a throwback to the days of past. With a focus on swing points and the qualification of trends, L.A. provides a breath of fresh air to an otherwise crowded room of derivative indicators with the emphasis on technical minutiae.

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