A.O. Smith (Thursday’s close US$54.82) declined from US$68.39 to US$40.34 in 2018 (A-B), had a recovery rally to US$56.65 in 2019 (C), and then settled in a bullish price pattern known as an Inverse Head-and-Shoulders formation (solid lines). The recent rise above the neckline of this pattern (above US$53-54 – dotted line) signaled a breakout and the start of a new up-trend toward higher targets (D).
Behaviour indicators including the rising 40-week Moving Average (40wMA) confirm the bullish status. There is good support near US$51-52 and then at US$49; only a sustained decline below this level would be negative.
Point & Figure measurements provide targets of US$59 and US$64. The large Inverse Head-and-Shoulders pattern (solid lines) supports higher targets.
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Monica Rizk is the senior Technical Analyst and Ron Meisels is the president of Phases & Cycles Inc. (www.phases-cycles.com). They may hold shares in companies profiled.
Chart source: www.decisionplus.com
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