Stock Charting: Alberto Culver (ACV)

“Wooten” requested that I analyze Alberto Culver Co. (ACV), so here it is.

Want me to analyze a particular stock or sector? Well, let me know!

Alberto Culver Co. is a great find from “Wooten” and a potentially great long position the sooner a trader gets in. The reasons: 1) ACV broke through $28.50 resistance twice, signaling that traders are still holding, and additional traders are buying, 2) ACV continues its uptrend without a break, highly likely to signal the end of 7+ month neutral range-bound trading, and my favorite…3) ACV formed a rising three method pattern.

This particular pattern is one of my top three patterns to look for when entering into a long position and the failure rate is extremely low (I can’t remember off the top of my head when it last failed on me). A rising three pattern is seen below:

First, a full while candle, or up day closing at or near its highs, must be needed. Second, a series of narrow consolidation down days are needed, typically 2-5 days, and in ACV’s case, three. These pullback days must not close lower than the open of the first full white candle. Third, another full white candle must appear which must close above the first full white candle. ACV has done exactly that.

The reasoning is that the narrow range (usually a few pennies) is being observed by both bulls and bears to determine if the breakout would hold. Once it is realized that the bears do not have control, the bulls step in a finish them off. This is same as the typical flag pattern that you see after large breakouts to the upside.
I like ACV at this point and I may consider adding a position of my own.

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Comment by Scott Johnson

2008-09-13 22:21:40

John
I like your blog, and nice job on the charts. Got it bookmarked now.

Scott

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Comment by John

2008-09-14 02:38:29

Thanks Scott. I appreciate it. If you want me to feature something, let me know.

-John

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