Two more that might go BOOM

Two other stocks I'm watching closely are BOOM and UAUA. The first Dynamic Materials (NYSE: BOOM) was brought to my attention to a friend who had traded it recently. The latter is United Airlines, a stock I've followed for some time (and kicked myself for not having shorted it when I wanted to at $20 in April 08.

Dynamic Materials' business is described as follows: "Dynamic Materials Corporation provides explosion-welded clad metal plates and welding services. The company operates in three business segments: Explosive Metalworking, Oilfield Products, and AMK Welding." (source: Yahoo). It trades at a PE of about 15. Its daily chart is as follows:

BOOM - Daily

BOOM has been forming a falling wedge since the beginning of this year. The pattern is huge and the stock price is now at major support. A falling wedge is a reversal pattern and in this context can be seen as bullish if a breakout forms. The chart can be seen as follows:

The low on this chart which the stock has just bounced off slightly also represents major support as it is a 2 year low that was repeatedly tested (and held) throughout all of 2006. If a breakout was to occur above the falling trend line, a target to the falling 200 day moving average would be conceivable.

UAUA - Daily

United looked down and out in mid July when it hit a low of just over $3 - down from its high of $50 in October! Since then the stock has bounced back as oil has fallen from its own highs and has gained a remarkable 350% or so in a month. The chart follows:

The stock broke out of a falling trendline in July and has since headed higher. I believe the pattern it broke out of was a Descending Broadening Wedge (which is a bullish pattern). It closed slightly above resistance on Friday 15th August's close and if oil stays lower (or even falls), we might see United go test the 200 day moving average. However, I personally find this stock interesting not because of its potential to get higher but as a candidate to short. If oil bounces back we could see a very violent retracement of some of the past month's gains which have come very very quickly. A retracement to that trendline (where the 50 day moving average now sits) could be a possibility.

Both these stocks are volatile and require caution but are going to be very interesting to follow in the coming weeks.