Skip the Drama and Get Bullish on CBS

 | Apr 19, 2017 | 3:19 PM EDT
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CBS (CBS) has made a very strong rally from its September low, but further gains into the $76-$81 area look possible in the weeks ahead as prices continue to rally from a three-year high-level base pattern.

With CBS trading above its 2015 and 2014 highs and our favorite indicators confirming and supporting the advance, we want to suggest a bullish stance on CBS. Let's tune into the latest charts below.

In this daily bar chart of CBS, above, going back 12 months, we can see how effective the 50-day and 200-day moving averages can be at times. In late September, CBS turned up sharply above the rising 50-day and 200-day averages. Any dip to or toward the rising 50-day average since October was a buying opportunity. In the past year, the price of CBS was only below the 200-day moving for a short time in August/September. The On-Balance-Volume (OBV) line has moved up steadily since late September, confirming the advance with signs of accumulation. The Moving Average Convergence Divergence (MACD) has been above the zero line since late September and is poised for a fresh go-long signal.

In this weekly chart of CBS going back to 2012, above, we can see prices are above the rising 40-week moving average line. Prices have spent a number of weeks above the 2015 high and the early 2014 highs. The overall shape of prices since early 2014 looks to be a bullish inverse head-and-shoulders bottom formation with a declining neckline that intersects in the upper $50s. The weekly OBV line has moved up and down with the overall price pattern and its advance since October is supportive. The weekly MACD oscillator is above the zero line and could cross to a fresh go-long signal.

In this Point and Figure chart of CBS, above, you may have an easier time of "seeing" that inverse head-and-shoulders pattern. The first upside price projection from this pattern is $76, but other Point and Figure charts give us measurements to around $81.

Bottom line: The charts and indicators on CBS are bullish and I would trade from the long side, risking a close below $64.

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