I know we are in the middle of August and in the middle of the worst drought in decades, so what the hell am I talking about? I mean, it doesn’t snow here in August. Well, maybe it does if you live in Cleveland, but I digress. Let’s go through the $ACAT charts below and figure it out. By the look of them people are stocking up on Snowmobiles early this year looking for snow.
First we look a look at the weekly chart shows a large Cup and Handle pattern has formed since the highs in April. While forming the cup the RSI retained the bull range never falling below 40 and the MACD never dropped below zero. Both signs of underlying strength.
Dropping down to the daily chart we can see a massive Island Reversal pattern formed at the bottom of the cup. Even better, as the handle formed it never fell into the gap at all, must less fill it. More strength. I have also marked the 6 period RSI Positive Reversal that fired on Monday confirming Friday’s Doji. Another note here is how the CFG never got oversold and followed price by diverging from RSI.
One last check on the daily shows the MACD is curling up well above zero while the Bollinger Bands are tight as a….you can fill in the blank.
And for our final check we take a look at the Point and Figure chart which is getting ready to challenge the all time highs which if broken will send us into Blue Sky Territory and a Bullish Price Objective of 57 about 25% above a proper breakout of the handle.
See, that was easy! We just have to look closely at the pretty pictures and it all starts to make sense.
(All market data above are derived from Stockcharts.com, Esignal, and Reutersdatalink)