AT 6/25/08

I bought this stock (again) today. AT @ 13.25 with a protective stop @ 12.25

TRENDS
* UNDEFINED PRIMARY TREND
* UNDEFINED INTERMEDIATE TREND
* SHORT TERM DOWNTREND | Directional wave | Recent support 12.50 | Prior resistance 15.25

With the primary and intermediate term trends undefined, the major issue becomes: is this apparent bounce and the ensuing upswing a correction rally of the present short term downtrend or the beginning of a reversal of the short term trend into a new uptrend?

Fully aware of the above, we extrapolate the possible scenarios.
(1) If the bounce off 12.50 is a correction rally that does not break short term trendline, then we can expect this rally to encounter selling pressure at or near the trendline which is app 14.00 and start a new downswing.
(2) If the bounce off 12.50 is a rally that breaks the short term trendline but fails to break the prior resistance, then we can expect this rally to hit 15.25 thereabouts before heading back into a decline.
(3) If the bounce off 12.50 is a rally that breaks the short term trendline, breaks the 15.25 resistance, and turns into a reversal of the short term downtrend - then it could lead to any of the ff further scenarios. (3.1) the rally fails to break the major resistance of 17.00 forming a potential double top that could insinuate a potentially huge move lower, or (3.2) the rally eventually breaks 17.00 and proves to be a second directional wave of a new intermediate uptrend.

Considering the above, I see the following potential trade. Enter at 13.25 (which I did earlier today) with a protective stop below the prior support of 12.50 thereabouts. The 4 scenarios yield TPs of 14.00, 15.25, 17.00 and 19.00, depending on which actually comes to pass. If I compromise and use the simple average of the TPs, I get a theoretical price objective of 16.31. My potential profit is 3.06 per share and the potential loss is 1.00 per share for a Risk Reward Ratio of 3.06, a figure that is acceptable to most technicians.