You are either using options OR are planning to . . .right? (November 28, 2015)
AOS
I saw this stock and I just wanted to get this video out to you. AOS ( NYSE:AOS ), this is a really bullish pattern. Earnings are not an issue, they don’t report earnings until January. So here’s what I’m looking at: First of all the downside for us is, the stock is extended a bit above the 200-day moving average, over 17 percent. If we look at the last high, where the stock rolled over, it went up 25 percent above this 200-day moving average. Back here, 23 percent and it just kept going. So at 17 percent, I still look at this as kind of high. But retaliative to where this stock has traded in the past not really.
Also, I always laugh when I get a video telling me that I’m full of crap on this, “There is no such thing as a head and shoulder continuation pattern, they’re reversal patterns.” Well, that’s right, they are, except for the times they’re not. This is a head and shoulder continuation pattern, where there is an uptrend, lower low. We like to see lower highs (I’ll tell you why in just a second), then we get a rally back up to wherever it goes to, here. I’m showing you the closing prices not this thing, so we get a lower low here. Then we get a big sell-off. So far all this is a lower low, still a gap and reverse, and then a move higher to a lower high.
Now we’re looking at a potential head and shoulder pattern, guy standing on his head, and then we see a move higher. Now we’ve got a neckline, the distance between these two points, you can use this one, whatever. So this our neckline. The idea is, if we take the low here, we’ll say $50.00, up to the neckline, and I’m just going to say 73.00. So that’s 23 points that we’re seeing, from the very low up to what turns out to be a neckline. So once we see this breakout here, from this level here, we see the breakout here at $73.00, so then we add $23.00 to that, 93.00, 94.00, 95.00, 96.00, so we’re looking at an upside target here of $96.00.
So that would be my analysis on AOS ( NYSE:AOS ). We’re looking for an upside target of $96.00. There is no time frame on this, that’s the whole thing. There’s no time frame on this. It’s just, from a technical standpoint, there’s a $96.00 target on this. I think this is a stock, ANY kind of pullback at all you want to be buying this stock. But look for more upside from this. Just again, know that it’s still a little bit extended, but the pattern looks really good. Also, love this little consolidation. And by the way, I mentioned at the outset, we like the downtrending necklines and that is because once the pattern is completed, in other words the neckline is broken we’re at a lower price.
So the stock is at a lower price, which by definition gives us a lower entry point than if we had a neckline up this way, where now we’ve got to wait for a breakout here, when the stock is already over bought. So we look for this type of stuff. Also, the point of this video is not just that AOS ( NYSE:AOS ) is a good buy right now. The point is that you look for these head and shoulder continuation patterns and you pounce on them on the initial breakout, either here or after this little through back, and then a move to the upside. The bottom line is, if you’d seen this pattern you could be in at $73.00, $72.00 very, very early in the breakout and already have a nice trade. So watch for this kind of pattern.
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