Back on May 11th, auto parts manufacture TRW (NYSE:TRW) was all the rage after entering into an agreement with Nokia Networks to provide high-speed fiber optic components. The stock looked like it was stalling at the $42.89, so lets see where we are now.
TRW Daily Chart
$43.80, almost $1 higher a month later. We had anchored our retracement bracket to the 3/27/00 high of $64.93 and the 12/14/00 low of $29.28, which gave us our 38.2% retracement level of $42.89. That level has been trampled over more times than a candy wrapper on a sidewalk, but more or less has acted as resistance. Sometimes retracement brackets look like the Holy Grail, but we all know that doesn't exist. Rather than just relying on specific retracement number, they can also identify resistance "areas." Notice how the area between the 38% and 50% brackets contained the battle between bulls and bears in June and July. That congestion area could be partially responsible for the stall now. Investors who have bought and held since last June have finally gotten back to even, and may be dumping their stock. Volume shows us that the selling is drying up, so everybody who wanted out at these levels has done so. Selling hasn't been that severe, since TRW hasn't pulled back as far as most stocks. A nice up day on good volume should push the stock out of the pennant its been consolidating in.
TRW Point and Figure Chart
The point and figure chart for TRW has only moved up 2 boxes since we last checked it. This brings up one of the differences between a bar chart and a point and figure chart. A bar chart must print something everyday the stock trades, but a point and figure chart can remain unchanged for extended periods of time. While TRW hasn't moved, it still remains on a buy signal and hasn't reversed into a column of Os like most stocks. Because the current column of Xs has not reversed, we still cannot finalize a bullish price objective. Back on 5/11 the "preliminary" bullish target was $62, since then two addition boxes have been added, so the target has been moved up to $68. As each additional X is added, another 3 points must be added to the target. Premier Markets is not actively covering this stock, just making some observations.