Friday, May 4, 2007

Update IMAX - Successful Breakout

As I mentioned before, IMAX had built support at the critical 200 DMA after successfully gapping through it on April 24, 2007. This effectively created support at a level of prior resistance. After demonstrating a failed breakout on meager volume yesterday, IMAX consolidated at the level of $5.15. For the remainder of the day, volume diminished and the stock showed strong support moving no lower than $5.13. Today the story is entirely different. In early trading, the stock gapped to yesterday’s high on strong volume successfully breaking that level of resistance. With 5 hours of trading left; 600,000 shares have already traded hands compared to the daily average of 488,824.

This movement should most likely be attributed to this weekend’s highly anticipated release of Spider Man III, which will be featured in IMAX theaters throughout the world. The film which is set for release in the United States tonight, has already trumped Asian records previously set by its prequels. It was even crowned the highest opening-day film ever in Hong Kong and South Korea. One can only speculate how the film will perform this weekend in the States.

Spider Man aside, there is still the overhanging uncertainty due to IMAX inability to file is 10-K 2006 annual report. The successful submission of this as well as a smooth resolution of previously announced accounting errors are essential for IMAX to continue its uptrend.

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