From the lows found during 2008 through to the stabilisation phase there wasn't much trending price action to write home about until a subsequent recovery got underway in 2010 which helped spur this stock past previous highs made in 2001. Perhaps the recuperation of all of the capital losses accumulated since the early 2000's as well as generating fresh highs highlighted the extent of intervention placed in the economy that allowed financial markets freedom to flourish.
But the most distinctive characteristic of this chart is the underperformance relative to the overall market return from 2013. Since this stock is considered highly defensive and the market switched from a risk off to a risk on environment, this stock failed to stand out during the market euphoria whilst registering new highs on the Dow Jones and S&P 500.
We now have a setting where this stock is beginning to outperform the overall market with signs of increased strength. The highs reached at the pinnacle of the last rally have been overtaken recently with a follow through to cement its ground above that level. What once offered resistance will now become a springboard to new rallies going higher.
The stochastic indicator breached the overbought area at critical resistance levels which made market participants wary of a breakout occurring. This resulted in a heavy sided short trade setup to be placed on this stock with the shift in sentiment providing impetus to drive up the price leaving behind a long positive candle to confirm the break.
Following onto the RSI, the downtrend thats prevent upside momentum from materialising has finally broken away setting forth a spurt of buyers to the upside.
Weekly
Consolidation took shape rather neatly as can be seen on the weekly chart with little to say about any significant trends to either the upside or downside. We can ascertain that the level of resistance broken was at $54 and the follow through is yet to pullback to test support.
Price sits above both the 50 SMA (yellow line) and the 200 SMA (blue line) with a golden cross being produced as recent as June. The curvature in the gradient of the 50 SMA suggest that buyers momentum is picking up which is likely to support the follow through further.
The stochastic is overbought and considering the long tail left to the top from three weeks back indicates buyer's strength might be waning here. However if we look at the RSI it's currently touching lateral resistance with a break above the horizontal level leveraging momentum to a faster pace. The last two weeks of price candles don't give much away which probably says both sellers and buyers are uncertain of direction.
If buyers could mount themselves above the highs made in early July there's a likely chance the rally will continue given the depth of the range. The move above resistance shows healthy signs of a uptrend being enforced so a considerable degree of upside movement can be expected taking into account the follow through hasn't moved too much away from the breakout.
No comments :
Post a Comment