Bang! Bang! Gunfight in the Hunting Store
- Posted by Greg Harmon
- on January 18th, 2012
That is the only explanation I can come up with for the stock prices of two gun manufacturers, Sturm Ruger, $RGR, breaking out to all time highs, and Smith & Wesson Holdings, $SWHC, at 2 year highs and looking ready for more, while the hunting store chain Cabela’s, $CAB, has been stuck in a rut for a year. Gun buyers must be having a gunfight in the hunting store. Check it out.
Sturm Ruger, $RGR
Many analysts noted the strength in Sturm Ruger, $RGR, and some the break out above the ascending triangle formed by the 100 day Simple Moving Average (SMA) and the resistance at 36.80 last Friday. It is consolidating now with a Measured Move higher to 44.20, but still has room to the target of the pattern breakout at 48.50 above that.
Smith & Wesson Holdings, $SWHC
Smith & Wesson Holdings, $SWHC, was an earnings play in the premium site in early December and it has been running higher ever since. It is in a bull flag now consolidating over a 161.8% Fibonacci Extension of the move lower from July through to October. The next target is the 200% Extension at 5.07 and a Measured Move to 5.20.
But Cabela’s, $CAB, limps along under falling trend line resistance creating a tightening range. All of the SMA’s are now moving sideways with a Moving Average Convergence Divergence (MACD) indicator giving little guidance and a Relative Strength Index (RSI) that can’t decide if it wants to be bullish or bearish. It will take a move over that resistance at 26 to get legs and create a target of 34.50 on a break of the pattern. A fall below 23.80 takes it back to the long term support/resistance at 21.58.
Can the continued strength in the gun manufacturers pull $CAB higher, or will it act as an anchor and pull them back lower. Time will tell.
Sound credits on the video to MasterHand125
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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