With just a quick glance at the chart, Bona Film Group Ltd (NASDAQ:BONA) doesn't look like anything other than an erratic mess. When you take a step back and take a look at the longer-term chart of BONA, however, you can see the last several weeks have ushered in a major bullish change of direction for the stock... meaning now's a great time to start wading into a position.
For those not familiar with the company (which is likely to be most of you), BONA is diversified Chinese film company. Bona Film Group Ltd does everything from filming movies to distributing them to supplying the talent that stars in films. As you might imagine for a small movie-media outfit, revenue and earnings are uneven for this company. But, it's at least producing revenue, and is profitable more often than not. That alone makes it unique among companies of its size and ilk.
That's not why a newcomer would want to step into a Bona Film Group trade now, however. No, the reason this stock is suddenly so compelling is rooted in the way the chart of BONA has taken shape since early August. If we trust the clues and take the hints at face value, we're on the verge of a very big rally.
Starting with the more detailed daily chart, take a look at how BONA has moved above the key 200-day moving average line (green) in mid-August. Better still, notice how the stock have moved back above the 200-day line for a second time this month after slipping back under that level in late August. In the meantime, the 20-day line (blue) as well as the 50-day line (purple) have both inched above the 200-day moving average, and the 100-day moving average line (gray) is close to doing the same. And, the 50, 100, and 200-day moving averages are now all three sloped upward, telling us Bona Film Group Ltd shares are bullish in all three timeframes.
To fully appreciate the bullish hints the daily chart is dropping, however, you have to take a step back and look at a longer-term weekly chart. As you can see below, the recent cross back above the 200-day moving average line is a big deal, in that it's the first time it's happened in many, many months. At the same time, the move carried BONA shares above a nagging falling resistance line (red) that had been holding the stock down since mid-2012. This IS a paradigm shift.... for the better.
The clincher is the fact that volume has been so strong behind the new upswing. This was the missing element with prior rally efforts Bona Film Group had made since early 2012. Thing is, the rally as well as the volume behind it are still accelerating, meaning we've not even come close to hitting a top yet. Time to dive in.
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