Boston, MA 10/04/2013 (wallstreetpr) – DiamondRock Hospitality Company (NYSE:DRH) (Closed: $10.79, Down: 0.92%) tested the previous day’s closing price for a while in the opening hour on Thursday but soon kept falling to make new lows for the rest of the session before recovering a bit by the closing. The price action created a Turning Top candle, signifying indecision on the part of the traders. This was the second consecutive Inside Bar formed inside the range of Tuesday and implies that a very strong unidirectional move is coming once the Tuesday range of $10.61 – $11 gets broken. The volume was very high at 6 million, about 3 times higher than the average volume of 2 million.
The stock had its debut in 2005, in the early phase of the bull market which resulted in a rally to the high of $22 by mid 2007 from the 2005 low of $10.54. The euphoria over this doubling of the value of the stock turned out to be short lived as the bear market of 2008 nearly clobbered the stock as it dropped to $2.30 from the top in just 16 months. The bounce from that low could retrace about 50% of the entire fall before falling again but managed to establish a higher low.
Currently the piece is stuck in a range with the upper boundary around $11 – $11.10 and the lower boundary around $8 – $8.10 since November 2011. The smaller range of $9.40 – $11 has seen most of the price activity. In the short term, the price can find support at $10.30 and at $10 below that. But it needs to stay above these supports and break and sustain above $11 – $11.10 to entertain any serious bullish hope. Otherwise, only a lot more range bound price action can be expected. The indicators are supporting buying on dips, so the lower ranges can be utilized to invest in.
