I'll be keeping an eye on CECO in the coming days to see if it can breakout of a year long basing pattern. A couple of important things have been happening in this stock. First, the 150 day moving average, which CECO is trading above, has stopped declining and has flattened out. Next, the Relative Strength has been on the rise since about April of 2008. The last thing I noticed was the big increase in volume today. It traded 4.4 million shares today, while the average over the past 4 weeks has been 1.3 million. It is important to wait for a follow through on price and conformation in volume. This stock tried to break out in September 0f 2008 on above average volume, but failed as price did not follow through. If CECO continues to rally through resistance on strong volume I'll be looking to enter a long position.
While I generally just focus on technicals, I will note when a stock's general fundamental story lines up. While none of the basic fundamentals (such as P/E, PEG) look all the great (except for debt levels), the industry that CECO operates in is a good one. The education services industry has been an outperformer over the past year. As employees lose their job, many are motivated to go to technical schools that offer degrees in a short amount of time. This is the exact business that CECO is in.
With both the technicals and fundamentals lining up, I would be a buyer if CECO does follow through on the breakout.
Career Education Corp (CECO)
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