It’s only been a couple of days since we highlighted this penny stock, but the chart is shaping up so perfectly, we thought it would be useful to update our coverage of BRT Realty Trust (BRT)…. and talk about some things we didn’t talk about then.

Just to be clear, the curling “U” shape is still the key to our attraction. Those slow reversals are able to take enough time to find a firm footing, making the upturn more apt to last. And, since our last look, BRT has continued to make higher highs on higher volume.

What we didn’t get to mention last time was how these curls can be highlighted by a MACD indicator. The nearby chart and its MACD lines are almost a perfect illustration of what you may want to look for as well….a gradual reversal, particularly one made on rising volume (which we see here, with those rising blue volume bars).

Is it perfect? No - nothing is. You can look not that far back on the chart and see several MACD fakeouts. Then again, we don’t use MACD lines by themselves. They’re one of several tools we look at; all of them have to come together at the right time in the right way to get the right ’set up’. BRT just happened to do that a few days ago.

As for the other tools we consider, stick around - we’ll discuss them eventually.

Some of you also inquired about a target. As with the MACD indicator, we think about several big factors to that end. One of those considerations is the chart’s history. The other is our time frame.

In this particular case, since our initial attraction to the chart was only based on the last couple of months and what’s happened to this penny stock since the May plunge. Since the ’set up’ only took a couple of months to materialize, we’re only thinking about a holding period of a couple of months, and only a target price around the high where the clock started…. around May’s high of $5.72. (Prior peaks almost always make smart targets.)

If you’re into longer holding periods (which is fine), you may want to perform the same kind of analysis using weekly charts instead of daily charts. In those long-term cases, know it may take weeks for a chart to make that evident U-shaped curl. However, the uptrend could last for months if you pick ‘em right.

We don’t see a ton of bullish momentum building on the weekly chart just yet, and may not for months. However, considering this stock was once trading at $30 and is now at $5, it may be worth watching for a while.

Remember, the slower and smoother the recovery move, the more reliable the follow through is most of the time.

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