PPL Corp. (PPL) broke out to the upside at the end of January and its recent sideways consolidation is an opportunity to go long or add to existing longs.
The recent upside breakout for PPL (see the chart above) follows a four-month consolidation from October through January -- which a chartist might describe as a rectangle formation. Buyers have been signaling strength in PPL for months as the On-Balance-Volume (OBV) line turned up way back in June! Since June, the buyers of PPL have been more aggressive, with the volume of shares traded heavier on days when PPL closed higher. If you prefer math, the moving averages have been positive since early October when a golden cross happened as the shorter 50-day simple moving average went above the slower 200-day average. In addition, the slope of both these popular averages are positive, telling us that mathematically we are in an uptrend. Last, the trend following Moving Average Convergence Divergence (MACD) is positive.
This longer-term chart of PPL, above, supports the short-term view. Prices are above the rising 40-week moving average. The OBV line has been moving up for nearly a year on this timeframe and the MACD oscillator is confirming the advance. Traders and investors should approach PPL from the long side at current levels or some slight weakness. The next leg higher should see PPL reach the $38 to $42 area. A close back below $33 would turn the chart negative.