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Tony Golan
Chief Technical Analyst
StockProfit.com™
 ZoomPyramid Oil Company (AMEX: PDO) is starting a strong long-term up-trend. The stock is making higher highs and higher lows above a rising 200-day moving average (the red line in the chart above). Relative Strength Differential (RSD), our proprietary indicator for selecting stocks in super-strong up-trends, is far above the 25% threshold, indicating PDO is currently one of the best-performing stocks out there and is therefore likely to continue outperforming the S&P 500.
PDO spent the last year and a half mired in a sideways trend, swinging above and below the 200-day moving average without trading very much volume and definitely with no direction. However, all that changed in early April, when PDO crossed above the 200-day moving average when it was around 3.50, and proceeded to rally sharply. On Monday, PDO hit a new 52-week high of 9.73.
Following a rally this powerful that has distanced itself from the 200-day moving average by that much, any correction is likely to be short and mild and be followed by a bullish reversal pattern, and continue to make higher highs and higher lows. Such a correction, and the ensuing turn back up, will provide an ideal entry opportunity to establish new positions. It will also indicate a new, higher support level for the stock, and protective sell-stop orders would be placed below this new, higher low.
Of course, a correction like that may never materialize. The stock could just reverse back down sharply and continue to decline with strong momentum, which would mean the stock would not be likely to turn back up and rally to new highs, and would therefore negate the reason for buying it in the first place.
As you might have guessed, PDO is too overextended right now to go buy it right now. It is, however, trending up powerfully and worthy of keeping an eye on in case a buying opportunity does present itself.
Tony Golan
Chief Technical Analyst
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