If you like junk food such as PizzaHut, KFC or TacoBell..well do not worry it looks like more & more people are consuming YUM! Brands (YUM). The stock is holding on a 4 year trendline and lately constructing a 20 months rectangle top that is on the verge on breaking out. Target implied is $87.
Boeing (BA) ascent has been similar to a plane take off rising sharply into the skies. As shown on the chart the trendlines are becoming more & more steeper. In addition to a break of the steepest minor trendline, yesterday’s action also illustrate a 2 day island reversal. Although BA gaps a lot, the island formation should be taken into consideration.
Did you know that Europe approved use of in-flight electronics during take-off & landing. Read more here
- Boeing Airplanes To Have Folding Wings. (moptoolz.wordpress.com)
- Boeing Tumbles as Oppenheimer Cuts on Optimism-Obscured Challenges (blogs.barrons.com)
- Boeing Deals Fly High in Dubai, and 4 More Things You’ll Want to Know Today (dailyfinance.com)
Zillow (Z) is one very very lucky stock. Z has 2 friends, one very close & old; an 11-months trendline and the other a new 11-week Gap. The trendline has been a very good friend saving Z from the bears on a couple of occasions. Meanwhile the gap saved Z from the recent shutdown/ceiling conundrum and acted as a trustworthy support. So what has changed? The long time trend line has turned its back on Z the last 2 days despite a raging new highs market. A H&S top slanting downwards is in the making and the neckline may meet the gap (the ONLY friend Z has left).
United States Gasoline Fund (UGA) has celebrated valentine in February this year by rewarding the bulls with over 400% increase since 2009. Now UGA is forming a 1 year H&S Top, with 53.35 as the neck line. UGA has also been sitting comfortably on a 4 year trend line. These are warning signs, watch closely for a double bearish punch down if the H&S breaks down and the trend line does not hold. The implied target for the H&S Top is 44.
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Diamond Offshore Drilling (DO) touched its ever high of 149.30 on the last day of 2007 and has been in a down trend ever since. 3 interesting patterns that have developed in that period;
Starting off with the weekly picture; DO is forming a descending triangle shown in green. According to statistics most descending triangles break to the down side.
Second warning sign is DO medium term trend line (in red) since 2011 broke down today.
On the daily chart DO has completed a 10-months H&S Top with blue neckline.
These are the warning signs and I will leave you to reach your own conclusion on where DO is drilling next 🙂
Awaiting your likes & comments and sharing
Spectranetics (SPNC) has been on an uptrend since early 2009 and has been respecting its trend-line drawn from March 2011 until August 2013 where the trend-line broke down. The bearish case accumulates further with SPNC unable to trade back above the 200 day moving average for a week. Furthermore, SPNC has a 6-months H&S Top in the making with life support at 16.79. Note that this support level was a major resistance level back in 2007. A break and close below the neckline yields a possible target of 12.80. One drawback for this short idea is its low volume. Will the bears pull the plug on this one?
The below chart of Analog Devices (ADI) strikingly conveys the theory of “the trend is your friend”. But looking more closely, I have highlighted instances where chart patterns (specifically Head & Shoulders). These patterns give more confidence in holding or selling the stock.
Starting in 2009, ADI formed a H&S bottom (highlighted in the first box) and broke out starting its rally to this date.
The second box illustrates a H&S top that failed and the stock continued to rally.
Third box shows a H&S Top which probably had a lot of people selling/shorting the stock. Although the stock reached its breakdown target, it did not violate the trendline in place since mid 2009.
Fourth box show a continuation H&S bottom that broke upwards.
Recently, ADI formed a 5-months H&S bottom that broke out with an implied target of 52.
If this chart beautifully illustrates one thing, it is how chart patterns greatly increase the confidence of your trade and clearly defines boundaries in case of accumulation of the stock.