The Geometry of Sprint
- Posted by Greg Harmon
- on January 10th, 2013
Sprint, $S, had a fantastic 2012, rising over 175% from the low to the high. You can understand after a move like that when the stock consolidates for a bit. But this stock has some very interesting features in its weekly chart over the last 5 years. First the strong ‘V’ recovery that many stocks had out of the financial crisis. Then the symmetrical triangle that began when it hit resistance from the 2008 bounce at 6.00. The break out of that triangle higher failed at 6.00 again and collapsed into what has turned out to be a Cup with this consolidation acting as the Handle. So actually the rest is not a rest but rather a continuation of the non stop morphing from one pattern to another that has characterized Sprint over this 5 year period. Now back at that magical 6.00 level and ready for a new pattern which way will it go? There are many indications that the next move is higher. First, the
Cup and Handle suggest a move higher to a target of 10. But that is reinforced by the Relative Strength Index (RSI) that is still bullish and has now worked off the technically overbought condition. Notice at the bottom of the chart that the accumulation/distribution indicator stalled in its up move at the same spot on both sides of the Cup but is holding and starting to turn higher. The Bollinger bands have become relatively tight and are now pointing higher ready to spit it out like a cannonball. The last interesting point is that the 50, 100 and 200 week Simple Moving Averages (SMA) are all crossing now as the price tests the Handle top range and that 6.00 magical area. Quite often these multi-SMA crosses end up being a catalyst for movement. Time to buy? On a break over 6.00 absolutely.
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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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