Wyckoff Power Charting

Aerojet Soars

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Lockheed Martin (LMT) announced in December the acquisition of Aerojet Rocketdyne Holdings (AJRD) for $56 per share. From a Wyckoff perspective this appears to be a great deal for LMT. The Point and Figure chart indicates that Lockheed management knew they were purchasing an undervalued company. We typically think of the ‘Composite Operator' as a stock market participant (institution, hedge fund, mutual fund etc.). While corporations can be among the most astute accumulators of the stock of companies they would like to acquire outright, or have some ownership interest. AJRD is an example of deft Accumulation of shares prior to the takeover of this company. We don't know who the purchasers of AJRD shares were prior to the announcement, but the classical footprint of C.O. Accumulation appear on the chart. If LMT ends up paying the full $56 for all the shares of Aerojet they seem to be securing a great asset for their shareholders. Let's see why.

In 2020 AJRD was being systematically accumulated. Note the rising volume during down columns. This was the C.O. absorbing shares on a declining scale within the PnF count structure. The highest volume was on the decline into the Spring. A classic ‘catapult wall' propels AJRD out of the Accumulation in what is often referred to as a ‘Jump Across the Creek' (JAC). If AJRD had not been acquired, the PnF count would have argued for a $102 price objective. LMT management got a terrific deal for shareholders and announced the buyout at a classic Wyckoff chart moment.  

All the Best,

Bruce

@rdwyckoff

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Bruce Fraser
About the author: , an industry-leading "Wyckoffian," began teaching graduate-level courses at Golden Gate University (GGU) in 1987. Working closely with the late Dr. Henry (“Hank”) Pruden, he developed curriculum for and taught many courses in GGU’s Technical Market Analysis Graduate Certificate Program, including Technical Analysis of Securities, Strategy and Implementation, Business Cycle Analysis and the Wyckoff Method. For nearly three decades, he co-taught Wyckoff Method courses with Dr. Learn More
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