Tyson Foods (TSN) made an upside breakout from a recent consolidation. Higher prices are expected.
TSN rocketed higher the past few sessions, breaking out to a new 52-week high (chart above). The slope of the 50-day average is rising, as is the 200-day. The On-Balance-Volume (OBV) line also made a new high, confirming the price strength.
The longer-term chart of TSN is bullish and the breakout can be seen clearly.
The point and figure chart of TSN, above, also shows the upside breakout and a price target of $64. A pullback to $46 would make us uncomfortable.
Nov. 30, 2015 | 2:40 PM
JD.com Is Showing a Rising Wedge Pattern
- JD could quickly erase all the gains since early September.
A rising wedge pattern is one of the great mysteries of charting. The chart is going up, but the pattern is inherently weak and the whole pattern can end badly if the chart breaks out to the downside. Unlike triangles that have one horizontal trend line and do not reach their apex, the two trend lines that outline the wedge are rising and converging to an apex.
Starting from a low in early September (see the chart above), this chart of JD.com (JD) rises with narrowing swings. Ideally, the volume of shares traded during the wedge dries up, but that is not the case in this example.
In this chart of JD, I want to focus on the relatively flat On-Balance-Volume (OBV) line, despite the heavier volume the past four months. A flat OBV line is not the same as light volume, but the result may be the same. In the lower panel, we can see a bearish divergence with prices rising and the momentum study showing lower highs during October and November. If JD breaks to the downside, it could quickly erase all the gains since early September. Be careful out there.
Nov. 30, 2015 | 12:45 PM
A Tale of 2 Stocks: Ambarella and GoPro Are Headed in Opposite Directions
- Unlike our peak and recovery story for AMBA, the shares of GPRO show erosion all year.
Our recent examination of the charts of Ambarella (AMBA) and GoPro (GPRO) suggest that one can rally while the other could languish.
The chart of AMBA above has something to offer bears and bulls. In June and July, we can see a double top formation. The On-Balance-Volume (OBV) line peaks in June and the slope of the 50-day moving average turns down in late August. Prices are sliced to $50 by the end of October from just shy of $130 in July. A turnaround to the upside gets under way in September and October as prices make lower lows and the momentum study makes higher lows. This bullish divergence foreshadows the price improvement in November. The OBV line has turned up in November and prices are now above the 50-day moving average. A rally back into the $70 to $80 area for AMBA would be in line with the improved technical picture.
Unlike our peak and recovery story for AMBA, the shares of GPRO (chart above) show erosion all year and no technical hint yet of a turnaround or bottom. Both the 50-day and 200-day moving averages are pointed down (negative slope). The OBV line is confirming the decline since August and the momentum study has yet to diverge from the price action.