Don't Ignore This Chart!

The Squeeze Play is on for Finish Line


2015 was a rough year for Finish Line and the Retail SPDR (XRT) as both fell rather sharply. FINL was down over 20% and XRT fell over 8%. 2016 is shaping up a bit different because FINL is up around 2% year-to-date and XRT turned positive on Tuesday. Furthermore, FINL sports a bullish pattern with signs of accumulation. 

On the price chart, the blue trend lines mark an ascending triangle. This is normally a bullish continuation pattern that forms after an advance, but I think the properties of the pattern are bullish wherever it forms. The higher lows show buying pressure coming in at higher levels and the equal highs represent overhead supply. A break above the pattern highs would be bullish and target a move to the low 20s. 

There is a Bollinger Band squeeze underway as BandWidth dipped to its lowest level since August. The narrowing of the Bollinger Bands tells us that there was a volatility contraction and we should now expect a volatility expansion. Bollinger Bands do not, however, provide directional clues. We need to watch the price chart for that and a breakout at 19 would be bullish. And finally, the bottom window shows the Accumulation Distribution Line (ACDL) breaking out in late December and continuing to move higher throughout 2016. This shows signs of accumulation and increases the chances of a breakout. 

The Bollinger Bands are shown as a pink area because I selected "area" as the "style" and then set the opacity to .3 using the advanced options. 

Thanks for tuning in and have a good day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at 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 market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
Subscribe to Don't Ignore This Chart! to be notified whenever a new post is added to this blog!
comments powered by Disqus