Set the Alarm For Tyco
- Posted by Greg Harmon
- on February 12th, 2014
Tyco, $TYC, started looking good for a trade to the long side in late January as it consolidated under the resistance at 41.75. It fell back and moved off the radar until this week. It is right back at that resistance. A push through it higher carries a target to 44 and it has a Relative Strength Index (RSI) that is bullish, near 60 and a MACD that has crossed up. Finally the accumulation/distribution statistic is at highs. These support a push higher. But what makes this stock more interesting this time at resistance is that Wednesday it printed a bearish engulfing candle. This can confirms reversal if the price closes lower Thursday. So now there are two ways to potentially trade this stock. A technician could make a case
for the downside trade as well. The RSI is in bullish territory, but it is flat and a rollover supports the downside. The acc/dist is also flat and would support downside movement with a rollover. And the volume on the latest up leg was decreasing, a sign of weakness. Does this mean Technical Analysis is crazy and just plain dumb? Of course not. TA gives a indication of where prices may move to or find support or resistance, but does not predict that a move will happen. So what do you do? Wait. Wait for a trigger over 42 to trade ti higher or under 41.15 to trade it short. Until then, set your alarm.
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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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