Orion Repairs Its Chart, Faces New Problems

• Paul Whitfield
• On 7:05 pm EDT, Tuesday October 27, 2009

About two weeks ago, we discussed the chart of Orion Marine Group (NYSE:ORN - News), pointing out that it was building a base but hadn't formed the right side at that time.

The midpoint 15f the base then was the same as it is now: 21.83 (found by adding the peak and low of the pattern and dividing by 2).

The insufficient work on the right side was a significant drawback. To form a valid handle, the midpoint 15f the handle must be higher than the midpoint 15f the base. Research shows that breakouts from low handles are more prone to failure.

There was a second problem. Orion remained below its 10-week moving average.

Today, the problems identified two weeks ago are gone. Orion has reclaimed the 10-week line.

It also has filled out the right side of the base and etched a handle.

The midpoint 15f the handle is 22.97, which is above the 21.83 midpoint 15f the base.

The potential buy point 19 24.48.

Even if Orion should clear its handle in fast trade, an investor has to consider two new drawbacks.

First, the general market has weakened. Second, Orion's Building-Heavy Construction industry group ranked a lackluster 135 of 197 groups two weeks ago. It sank to 162 as of Tuesday's IBD.