Bigger Upside Move Seen for Brooks Automation

 | Feb 21, 2017 | 2:42 PM EST
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"The bigger the base, the higher in space," was a favorite saying of Alan Shaw, CMT of Smith Barney Harris Upham. I found Alan to be a great teacher, technical analyst, boss and friend who did not know all the answers but was smart enough to ask the right questions at key junctures.

Brooks Automation (BRKS) has emerged on the upside from a very long base pattern, so we should see it make a still larger upside move in the months ahead -- higher in space. Let's check out the charts.

In this daily bar chart of BRKS, above, we can see prices have more than doubled in the past 12 months. Impressive, but this mark-up phase may just be getting started. Prices are above the rising 50-day and 200-day moving averages. The 50-day line crossed above the 200-day line in late June for a bullish golden cross. The On-Balance-Volume (OBV) line moved up slowly from May and more strongly since November, telling us that buyers were being more aggressive and accumulating BRKS. The Moving Average Convergence Divergence (MACD) oscillator is pointed up, but could narrow toward a take-profits sell signal.

This three-year weekly chart of BRKS shows more of the base pattern but not all of it. Prices are above the rising 40-week moving average line. The weekly OBV line has confirmed the price action with its own new high. The MACD oscillator has been bullish since June.

In this long-term Point and Figure chart of BRKS, above, we can see the base goes all the way back to 2007. The big breakout over the $16.50 peak has happened and the long-term upside price target is now $45.50. The bigger the base....

Bottom line: Already long BRKS? Great. Look to add on any dip toward $21. Not long BRKS? Look to buy a close above $22. I would risk to $19.50, looking for a "double" or more in the months ahead.

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