Building a Mosaic – American Axle

• Posted by Greg Harmon
• on September 24th, 2013

When I look for trade set ups I look for stocks that can break out for 5-10% moves or more in less than 2 weeks. This can give a good list or a bad list from week to week. What can keep a stock on the watchlist is having multiple types of Technical Analysis reinforce each other in a set up. One stock where this is happening is in American Axle & Manufacturing, $AXL. Aside from being linked to the hot auto sector, the chart is a potential powder keg. After moving $7.50 from the last break out higher it has been consolidating over the 50 day Simple Moving Average (SMA) in a channel

between 18.75 and 20.60 for about 2 months. There is no sign of a break out coming tomorrow but technically a move over 20.60 would trigger a Measured Move higher to 27.50. What makes it a bit more interesting is that when you broaden this picture out to a multiyear view the chart is also bullish, but from a different perspective. You can still see the move higher out of the 12.50 area and consolidation in what looks like a symmetrical triangle on this weekly timeframe. But there is more here. The bearish Bat Harmonic that has been building for 6 years has a Potential Reversal Zone (PRZ) at the

same place, 27.50. This gets me more interested. When there is a mosaic that can be built from charts of multiple timeframes and duration and they all point in the same direction, that is a big plus. Pay attention. Wait for your trigger, but pay attention.

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