Thursday, March 18, 2010

Perfect Impulse In KKD

I wish the stock indexes would count so easily as KKD has since its low in February 2009. KKD is exhibiting a nearly perfect textbook impulse wave up from its January 26 low of 2.56, which did not violate the origin of the previous impulse of larger degree on July 9, 2009 of 2.51. The decline from the October 2009 high shows 7 waves and is either a deep 2nd wave retracement or a X wave, the former being the most bullish. If we take the most bullish interpretation, then after a brief and possibly sharp pullback that does not violate the January low, KKD should take off in a 3rd of a 3rd of a 3rd wave that propels it to at least 8.00 and more likely 10.00. The thing about 3rd wave setups like this is that there is no determinate price objective. The stock can run to unexpected levels. There would be resistance at 12.00 to 13.00, but beyond that it is mostly clear sailing.

The less bullish view is that KKD is tracing out a very large double zigzag, but even in that view price should move above 6.00. If the 3rd wave interpretation is correct, there should be a surge in volume as KKD breaks out above 4.75 and particularly 5.00. I would like a see a 10MM share day to confirm demand for the stock. If volume fails to show up, then the less bullish view must be given the greater weight.

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