Basin Water (BWTR)

Company

BWTR 1-year chart BWTR 1-year chart

"We design, build and implement systems for the treatment of contaminated groundwater. We have developed a proprietary, ion-exchange treatment system that reduces groundwater contaminant levels in what we believe is a more efficient, flexible and cost-effective manner than competing solutions. We market our system to utilities, cities, municipalities, special districts, real estate developers and other organizations that supply water, collectively referred to as water providers, for use in treating groundwater sources that do not comply with federal or state regulations due to the presence of chemical contaminants. As of March 2006, we have 50 systems delivered or in process in California and Arizona with an aggregate installed capacity of approximately 86,800 acre-feet per year or approximately 28.3 billion gallons per year." (company website)

BWTR 6-month stock chart

Buy

Basin Water (what kind of a name is that for a company?) started trading in 2006 with a bang and then fizzled out to reach a new low at the beginning of 2007 (see sidebar).

  • Price momentum (PPO) — gone from very negative to strong positive momentum
  • Trend (ADX) — recently began strengthening again, and buying pressure (+DI) is very strong
  • Money flow (CMF) — strong inflow
  • Relative strength (RSI) — nicely above neutral again
  • Volume — pretty lightly traded, but average is more or less stable

Sell

gain Bottom line
3%

Free at last! When I bought BWTR in February, I didn't realize I was buying it at the end of an up-cycle on the way to a triple bottom! It immediately went up to over $8, and then plunged back on a roller-coaster of downs and ups ending with another new 52-week low near $6 at the end of March. Since then it has been climbing steadily upward again. Once it regained the 50-day moving average a symmetrical triangle formed and I had hopes that it would either break out (best case) or break down (nightmare). Fortunately it broke to the upside, and after regaining the 200-day moving average, BWTR was buoyed by news on June 11 of a deal in Arizona.

However, today was the third day of opening slightly up and then trading lower. I decided to bail out while I could still make a modest profit. Relative strength (RSI) and buying pressure (+DI) are both ticking down, indicating to me that a retracement toward the averages is likely. BWTR has moved up for about two months without a significant pullback, and I think one is highly likely, despite the signs of strength in the chart.

I am relieved to be out of BWTR with a modest profit. Whew!