Don't Ignore This Chart

Autozone Gets Back in Gear

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Autozone (AZO) is a leading stock because it recorded a 52-week high in December and remains above the rising 200-day SMA. The S&P 500, on the other hand, recorded a 52-week low in December and remains below its 200-day SMA.

The chart below shows AZO with a falling wedge correction over the last six weeks. Even though this correction occurred when the S&P 500 moved higher, I still view it as a pullback within a bigger uptrend. The falling wedge is typical for a pullback within a bigger uptrend and the decline retraced around 50% of the prior advance. Think two steps forward and one step backward. Also notice that AZO is finding support near the prior breakout zone (780-800). As such, I would expect an upside breakout and continuation at some point.  

The indicator window shows the Commodity Channel Index (CCI), which is a momentum oscillator. A move below -100 points to oversold conditions and a move below -200 points to serious oversold conditions. CCI dipped below -100 twice this year and moved back above with Tuesday's bounce. The green lines show when CCI turned up in the past.


On Trend on YouTube

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- Arthur Hill, CMT

Senior Technical Analyst, StockCharts.com

Book: Define the Trend and Trade the Trend
Twitter: Follow @ArthurHill


Arthur Hill
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com. He has written articles for numerous financial publications including Barrons and Stocks & Commodities magazine. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed technician. In addition to his CMT designation, Arthur holds an MBA from the Cass Business School at City University in London. Learn More
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