Orion's Chart Has Flaws, But Time Can Heal

• Paul Whitfield
• On 7:40 pm EDT, Thursday October 8, 2009

Houston-based Orion Marine Group is working on what could become a cup base.

The base began forming in late July, after a breakout failed.

Action has been a bit raggedy, but the chart shows accumulation.

Orion has two net weeks of accumulation, which includes a negative week with a close near the top of the range in mid-August.

A down week in above-average volume normally suggests distribution. But when buyers step in to push the stock back to the upper range, it's a sign of accumulation.

The defect in Orion's action is that it hasn't climbed the right side yet. The midpoint 15f the base is 21.83, and Orion still remains below that key level.

If it eventually shapes a handle, the midpoint 15f the handle will have to be above the midpoint 15f the base.

A breakout from a low handle is more prone to failure.

The handle also needs to be above the 10-week moving average. Orion has been at or below the 10-week line since mid-September.

While there are significant drawbacks on Orion's chart right now, they could be remedied with a few weeks of upside action.

Orion is 18% off its 52-week high.