Mindray Etches Base Within Larger Pattern

• Paul Whitfield
• On 6:32 pm EDT, Tuesday September 29, 2009

China-based Mindray Medical (NYSE:MR - News) has shaped a flat base, but that construction is tucked within a much larger pattern.

In August 2008, Mindray began a deep decline that eventually served as the left side of a yearlong base.

As it rose up the right side, it formed several low handles. A breakout from a low handle is more prone to failure.

In late July, though, it began etching a new handle. This one was in the upper half of the base, which is what you want to see. Still, it formed more than 15% off the 52-week high.

On Aug. 11, after reporting better- than-expected earnings, Mindray gapped up for a 14% gain. Volume was triple its usual pace.

However, the high it made that day has not since been touched.

Mindray began to correct, falling 13%. Volume fell off, which also is characteristic of a flat base.

Trade has been tight, and the stock has found support just above its 10-week moving average.

The potential buy point 14 the flat base is 34.59. For those who prefer to see the larger pattern, it could be read as a pullback to the 10-week moving average. Another possible interpretation is that the flat base is the handle to a large base.