SMP has certainly has been in an impressive up-trend since the low made on March 9th at 1.36. The stock has gone straight up to yesterday's high at 10.89. For that to happen, there must be some strong fundamental reasons. Without knowing what they are, my evaluation has to be taken with a grain of salt.

I did go back to Jan/Feb 2006 to find resistance as the resistance that was built in 2007/2008, up between 10.01 and 10.36 has been broken already.

Nonetheless, it certainly seems possible, maybe even probable, that the resistance from 2006 between 11.02 and 11.10 could hold up and generate a correction back down to somewhere between 7.70 and 6.72.

Without a doubt the stock is screaming for a correction as it is difficult to believe the buyers would continue to be aggressive at this price without an area of support they can use to buy against. The closest and most recent support level is down at 7.37. As such, continuing to buy this stock here, especially with good resistance above, offers a very risky trade for the bulls.

In looking at the weekly closing chart (Fridays), the resistance is at 10.65. Last Friday the stock closed at 10.56, so it is certainly possible that on Friday this stock could close lower, or at best just a few ticks higher. With the stock trading at 10.97, it certainly seems like a very good risk/reward ratio trade to sell the stock right here using a mental stop loss at 11.20 and looking for a drop down to 7.37-7.70. Such a trade would offer a risk/reward ratio trade of over 10-1. Such trades normally have to be done automatically, there is an immediate fundamental reason to think the stock is going higher for sure.

One thing I do need to mention, though. In a situation like this, when a stock has been so strong, it is not likely the first correction down would be dramatic. Too much buying interest is still in this stock. As such, I would expect the stock to trade down to about 9.40 on the first move down, trade back up to around the 11.00 level soon therafter, and then take the move down to the $7 level thereafter. That process to take somewhere around 7-10 weeks.

By the way, if the stock blows through the 11.10 level this week, then everything I said will be for naught as the stock has no resistance above until 14.17 is reached.

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