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Where a Long Windup Can Lead - Looks at KEM, BNVI, and PWER

|Includes: BNVI, KEMET Corp. (KEM), PWER

Bionovo Inc. (NASDAQ:BNVI) was hanging by a thread before today, having fallen under the lower edge of a not-so-symmetrical wedge (orange). With today's move to a low of $0.37, following Friday's dip to $0.35, I fear the bearish writing is on the wall for this small cap stock.

Why's that? Because Bionovo fell under horizontal support (blue) at $0.38 after more than ample opportunity to regroup and rebound. With such a long consolidation phase - a term I'm going to use again below - the best chance BNVI had at recovering has withered away... a reality underscored by the fact that everything else is making bullish progress today. On to new lows.

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If I hadn't seen the exact same scenario unfold for Power-One, Inc. (NASDAQ:PWER) back in March and April, I might not even bring it up now. It's too similar to dismiss though, as it may have very bullish ramifications for PWER.

In simplest terms, this small cap is consolidating not just within a symmetrical wedge (blue), but also a horizontal range (orange). I've got a feeling Power-One is going to repeat the April performance after a period of consolidation. So, if the $8.40 level can be cracked, look out above.


And finally, speaking of patterns, KEMET Corporation (AMEX:KEM) is making one that I view as very investment-worthy.... and I specifically mean investment-worthy, as opposed to trade-worthy.

I opted for a daily chart of this small cap rather than a weekly chart below, as the string of clues is more visible with the short-term view. If you get a chance though, be sure to check out a weekly chart of KEMET Corporation, which is where the scope of this slow and steady uptrend becomes clear.  

It's fits and starts framed by breakouts from short-term trading ranges (see the blue lines), but over time, it's working for KEM. What you can see on the weekly chart that you can't see here is (1) how consistent this progress has been in the long run, and (2) how much room there still is to recover. This small cap was as high as $10.00 in 2006, and the momentum over the last year and a half is the best-developed we've seen since then. The current consolidation ($2.00 - $2.50) for KEMET Corporation is just the build-up for the next bullish leg.

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Disclosure: No Position