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A 16.2% Return In 5 Weeks

Posted: 03/31/2014 - 11:03 am

On February 27, we expressed our positive view on Red Sea Housing (4230) saying that the stock was showing positive evidence that hinted at a probable breakout from its 66.00-72.00 trading range.

Our advice was to pre-position for a potential breakout by initiating positions at 70.75 with an open target (read: The pre-positioning).

Then on March 18, we highlighted the modest gains of 3.8% on the trade and we made the case for further upside. We kept the target open and adjusted the stop to 70.75.

A major rally has taken place since then with the trade generating a return of 16.2% in roughly five weeks.

Moreover, yesterday’s price breakout reaffirms the uptrend in the stock and suggests further upside despite the increasing volume levels.

It looks like the stock could be headed towards 90.00.

In short, we remain long and stress the need to protect the gains by increasing the protective stop to 79.25.

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