Advance Auto Parts (AAP) hit a new high in November and then moved into a corrective phase. Keep in mind that a correction can involve a decline or a consolidation, or even a combination of the two. AAP fell back towards the rising 200-day SMA in December and then stalled the last few months. Overall, this looks like a big correction with an even bigger uptrend.
There are signs that this correction could be ending. The stock found support in the 150-155 area three times in the last four months (green zone). The first two bounces did not hold as the stock retested support. The current bounce pushed the stock back above the rising 200-day SMA with good volume. The inset shows a high-volume hammer, a long white candlestick with high volume and a smaller gain with high volume.
Momentum is also improving. The indicator window shows MACD turning up and moving above its signal line. Thus, momentum is moving in the right direction as well. I view the surge and break above the 200-day as bullish as long as they hold. A close back below 155 would call for a re-evaluation.
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Senior Technical Analyst, StockCharts.com