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Call me crazy. Call me insane. But I'm looking at getting back into
Boston Chicken (BOST).
I made good money a few years ago in Boston Chicken convertible bonds.
But since Dec 96 this stock has sucked big time. From a high of 41 it
fell to less than 11. It now trades at about 13, with a PE of 11
(prior to today's earnings announcement.)
Boston Market is a great franchise. The one's I see are usually
busy, and personally, I like it: both the store and the food. (I
mean, compare it to MacDonalds for Christ's sake.)
Technically, BOST has been in a five month downtrend channel. But it
*may* be breaking out. If so, it's a slow, painful process.
I draw my Raff Regression channel from 3/5/97 to 7/11/97. This
requires some justification, as you could stretch or shrink it in
either direction.
I applied my usual criteria. First, it must be parallel to the 50-day
Moving Average. So I drew a Linear Regression line on the 50-day MA
from 5/22/97 to 8/6/97. Since the 50-day MA is pretty flat, the line
is not sensitive to these dates. Then I extend that line both left
and right. This makes it easier to tell if the Raff channel is
parallel to it.
Second, I drew a Raff channel over about three months of the data,
where I was pretty sure it was linear. I then pull the ends of the
Raff trying to make it as long as I can without making it too wide. I
also try to force each endpoints to lie on a price bar, and make the
channel parallel to the LRL of the 50-day MA. (A bit of artwork
there.)
None-the-less, I was able to draw what I consider an excellent Raff
channel. Also note that the top line of the Raff coincides with the
26-day MA. I like that too.
Now, using this Raff, what does the chart tell us? BOST made a deep,
sharp bottom on 7/10/97. This looks like a blow-off bottom. All the
weak hands sold their shares cheap.
Next, on 7/23, BOST broke the top of the Raff channel at 13 1/2. Over
the next two weeks, it hung between the 26-day MA and the top of the
Raff channel. (Resistance line becomes Support.)
Today, BOST is up on increased volume. Intraday it broke through the
26-day MA at about 13, and closed right on it. This looks to me like
a weak breakout.
I won't be buying it tomorrow, but I'm going to watch it closely,
while I do more research on the fundamentals.
Anyone out there have some thoughts to share?
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