American Water Works Co. (AWK) is a utility and that makes many people think about yield and defensive sectors, but a strong upside move in the stock is what I think of when looking at the charts. Another water recommendation was Xylem (XYL) , which soared in recent days.
Let's check the charts of AWK, an AAP holding, out together.
In this daily bar chart of AWK, below, we can see that prices have formed a complex inverse head-and- shoulders bottom formation. A what? You've probably already heard of an inverse head-and-shoulders pattern. A complex pattern just involves more shoulders -- in this case two left shoulders followed by a head and then a right shoulder. We could say that this pattern has two necklines. One neckline across the $157 area and another neckline up around $172.
Prices are trading between the rising 50-day moving average line and below the declining 200-day line. The On-Balance-Volume (OBV) line shows strength from early May telling us of a shift to aggressive buying. The Moving Average Convergence Divergence (MACD) oscillator has crossed above the zero-line for a new buy signal.