Clearwater's New Base Is Less Than Ideal

• Paul Whitfield
• On 6:12 pm EDT, Wednesday October 21, 2009

Since its December initial public offering, Clearwater Paper (NYSE:CLW - News) has shaped some nice-looking bases.

The first was a cuplike base. The maker of paperboard, tissue and wood products broke out in May in six times its normal volume.

After rising about 60%, it began shaping a flat base from June through part of July.

It cleared that base, but big volume never kicked in. Despite that, it rocketed 87% by late August.

On Wednesday, it broke out of a third, cup-without-handle base.

Third-stage bases are traditionally less promising than first- or second-stage bases. But they can work, especially in a bull market that isn't too mature.

If the current bull market turns out to be typical, it will last about a year and a half. It began in March.

Of course, there's no guarantee that this market will prove typical.

Clearwater's base isn't without problems.

The eight-week base didn't show much accumulation. The stock is thinly traded, which also can be a problem.

Its Relative Strength line, though, is near a high, which is bullish.

It crossed a 51.30 buy point but closed below it. On Wednesday, Oppenheimer initiated coverage with an outperform rating.

Buzz up!