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Strong

Remember Hewlett-Packard (NYSE:HPQ)?

Once the Apple of its day, Hewlett-Packard (NYSE:HPQ) made some unfortunate decisions that then tanked the stock. After reaching a high of $54.75 on April 16, 2010, the stock of Hewlett-Packard hit a low of $11.35 some 32 months later.

Since that time, the stock has made a recovery into the mid to high 20s, but still has further to go on the upside based on pure technical analysis.

Yesterday, I looked at the stock of Groupon (NASDAQ:GRPN) and illustrated its head and shoulders chart pattern, one of the most reliable technical patterns in my playbook. Hewlett-Packard is just the opposite, as there is a very well supported head and shoulders base that is capable, in my opinion, of taking Hewlett-Packard back up to the $37 or $38 level.

Looking at the Trade Triangles, the monthly Trade Triangle kicked in yesterday at $27.68 for Hewlett-Packard, indicating that all systems were now a "go" on the upside for this stock.

1.) Left shoulder of a head and shoulders bottom
2.) Head of a head and shoulders bottom
3.) Right shoulder of a head and shoulders bottom
4.) Head and shoulders neckline
5.) Breakout and monthly Trade Triangle buy at $27.67 on 12/3/13
6.) Fibonacci target zone $37.89
7.) All Trade Triangles are green

As with any investment or trade, always use money management stops to protect capital.

We would like to know what you think, so feel free to add your comment below.

Every success with your trading,

Adam Hewison
President, INO.com
Co-Creator, MarketClub

Comments

  1. john says:

    Adam...what is the common time frame used in defining the HS pattern? I see you used a one-year time period in the HP example.

    thanks

    • Adam Hewison says:

      John,

      A head and shoulders pattern both a top and bottom pattern has no time limit per say. Generally speaking the longer the time frame the more powerful the move.

      Thanks for the question, I hope my answer worked for you.

      All the best,

      Adam

      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  2. Mike says:

    I don't use the H&S formations for my swing trades. I agree that the stock looks like it is on the mend, but there is negative divergence on the MACD on the daily and weekly charts. I wouldn't go long this stock myself but could be some more upside. BTW, great site.

    • Adam Hewison says:

      Mike,

      Thanks for contributing to the conversation and your kind words much appreciated.

      All the best,

      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  3. john says:

    I flipped your chart to see what it would look like and the head & shoulders stood out well.

    • Adam Hewison says:

      John,

      That is a great little trick that I have used through out my career, thank you for sharing your ideas with fellow members.

      All the best,

      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  4. Josie says:

    It makes sense to see the stock on a graphic brings understanding
    I can see why HP is not doing well even though its a good product. In fact, just last week I was at Best Buy and I found HP laptop display is not in easily spotted Tablets like Apple, Nexus, Samsung, Lenovo and Readers like Kindle and Nook were more visible for customers to view
    This does have an impact on stock

    • Adam Hewison says:

      Josie,

      Thank you for research and insights. Once you lose shelf display in a major brick and mortar store like Best Buy it is very hard to win back that position.

      Every success,

      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  5. Benjamin B says:

    I really like these analysis emails as they make sense of the analysis

    • Adam Hewison says:

      Benjamin,

      Thank you for your kind words and encouragement. I will do my best to get more posts like the one you reference up on the blog.

      Every success,

      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

  6. jacob lazarowtz says:

    i agree and i would like to see more analysis on this stock
    the had and shoulder is very good
    can i trust this target
    thanks

  7. Edmund says:

    I can see your point and agree with your analysis but I tend to see the reversal as more of a Cup and Handle reversal which could propel the stock high into the $40's.
    Charting pattern interpretations are just as much akin to an Artistic interpretation as Scientific interpretations and I see a Cup and Handle that could extend from the High $40's into the low $50's.
    The Trend looks good.

    • Adam Hewison says:

      Edmund,

      As you probably know based on your comments chart patterns are as much artistic as they are scientific. Looks like we are both agreed on this stock moving higher based on different but similar chart formations.

      All the best,

      Adam

      Adam Hewison
      President, INO.com
      Co-Founder of MarketClub.com

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