Don't Ignore This Chart

What Part of Advanced Auto Parts' Chart Do You Like?

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Advanced Auto Parts (AAP) has been struggling around the 170 level for years and we are back to that level once again. The SCTR has been strong, having recently pulled back as price consolidated through the first quarter. The SCTR is a method of comparing the strength of price moves across a group of stocks. I like to find stocks moving into the top quartile (i.e. above 75).  The full stochastic is moving back above 50, which is also good on a weekly chart. The PPO is a momentum indicator. There are four real phases of momentum: rising below zero, rising above zero, declining above zero and declining below zero. Turning up just above zero is a very positive sign. This stock has a nice setup and looks strong.

If this market is going to start running into a bigger bull market, we should see some rotation into new leaders. One of the reasons I like the chart here is that we are also seeing Genuine Parts (GPC) and Autozone (AZO) break out to new highs as well. I quite like when whole industries are setting up a move to new highs. 

Here is the chart for Genuine Auto Parts:

Autozone has already made a big move, as seen in the chart below.

With all of these factors in play, a stop at the 40-week moving average should give this stock room to run.

Good trading,
Greg Schnell, CMT, MFTA
Senior Technical Analyst, StockCharts.com
Author, Stock Charts for Dummies

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The Canadian Technician

Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. Based in Calgary, he is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is also the author of Stock Charts for Dummies (Wiley, 2018). Learn More
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