Playing the Hewlett-Packard Break Up…or Whatever

News tonight is that Hewlett-Packard, $HPQ, may be discussing breaking up the company. What does this mean? Unlocking shareholder value? Several businesses now that could be take over targets. Leaner operations to drive quicker innovation in smaller focused groups? All of that is both possible and none of it may happen. Who cares! But breakup or not, this stock looks better to the upside. So while the analysts figure this out you might want to give it a whirl from the long side. The chart below shows at least 5 positive signs.


1. The Rising Price Channel. Since November it has been trending higher and moved up off the bottom of the channel Tuesday.

2. The 38.2% Fibonacci Level. After clearing the 23.6% Fibonacci it now has the 38.2% Fibonacci level just over head at 18.07. Should it clear that level then there will be more bulls entering the stock.

3. Potential 3 Drives Pattern. There have been two peaks or drives and now three evenly spaced bottoms. A third drive higher takes this to about 19.80 with a target of about March 10th.

4. The Bullish Relative Strength Index (RSI). The RSI has also been making higher highs and higher lows, with the last two lows holding at the mid line and in bullish territory.

5. The Rising 50 Day Simple Moving Average (SMA). Price crossed the 50 day SMA in December before it was retested and acted as support at year end. Since then it has been rising and Tuesday crossed up through the 100 day SMA. It is now on a path to print a Golden Cross, through the 200 day SMA, in mid March.

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Dragonfly Capital Views Performance Through January 2013 Expiry

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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