Monday, September 14, 2009

Bull Flag

While the message boards is full of the usual negativity (understandable by the way), UTs stock chart has formed a "bull flag".

Vital Signs

Bull flag formations involve two distinct parts, a near vertical, high volume flag pole and a parallel, low volume consolidation comprised of four points and an upside breakout.

The actual flag formation of a bull flag pattern must be less than 20 trading sessions in duration.
Most flag patterns occur at the middle of the larger move higher for a stock.

Upside breakouts often lead to small 2-3% rallies followed by an immediate test of the breakout level.

If the stock closes below this level (now support) for any reason the pattern becomes invalid


The pole measured a hefty 84 cents ($2.36-$1.52), give or take a few cents. This consolidation (symmetrical triangle or pennant) breakout is at $2.05-2.1 range. That would put UT close to $3 within a month IF this played out.

As with TA, "timing" may be a little off (head fakes) and you should look for volume confirmation.

Have a good evening.