A Speculative Long in the Hotel Space

Home Inn and Hotel Management (HMIN) manages a chain of economy hotels in the People's Republic of China. It is a volatile stock, down more than 50% from its October 2010 high to its October 2011 low. That low has been successfully retested twice this year and is starting to look like a triple bottom. Several other technical conditions are setting up HMIN as a speculative long play.

The weekly chart shows the downtrend off the highs since October 2010 and the potential triple bottom base that has formed over the last five months. The relative strength indicator and the MacD are flat, reflecting the recent consolidation, but the Williams %R indicator is moving out of an oversold condition. This indicator, similar to Fast Stochastics, tracks momentum changes and is more efficient during periods of consolidation. There were surges of volume and negative Chaikin money flow earlier in the month that were associated with a weak earnings report. The Bollinger band width indicator and average true range readings are indicating compression, which is often a precursor to a volatile move in the stock price....150 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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