Crabs Invading the Auto Sector

• Posted by Greg Harmon
• on February 13th, 2013

Many plays in the auto sector have been heating up over the past few weeks. In fact the whole place is getting so hot that it feels like they are at the beach in the summer. And rounding out the picture there are Crabs showing up. But how hot is it? Take a look. The chart for Johnson Controls, $JCI, below is consolidating in a bull flag between 30.60 and 32.00. A move over that flag carries a Measured Move higher to 39.40. It has support from a rising and bullish Relative Strength Index

(RSI) and a Moving Average Convergence Divergence (MACD) histogram that is about to cross to positive. If that were not enough to get you interested in a break over the flag, it is also in the middle of a Crab pattern. This harmonic pattern gives a very tight range for a Potential Reversal Zone between 41.74 and 41.98. Two very different approaches both give targets more than 20% higher. That get your attention?

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