Chart of the Week: Gap
Good morning. Happy Wednesday. It’s time for our chart of the week, and this week we’re going to be focusing on retailer, the Gap. GAP is the symbol. Let’s take a look at this chart. It’s starting to look a lot better recently.
So let’s take a look at this really nice bowl-shaped pattern I’m making with the parabolic tools over here. And you can see it’s made a nice little fishbowl pattern of a nice base here from the period of September along to November. And that is consisting of a nice series of higher highs and higher lows, and you can see that channel there. And it broke above that channel last time it reported earnings in late November.
So it popped up over here, came back down and tested some lower levels. And it’s bounced right off of that. It didn’t have a great day on Monday, December 9. But still, just a little bit of a pullback, a little bit of profit taking at a level where the stock was overbought.
Money flow has been good – you can see down here at the bottom. We like the good strong money flow. We had that back in October as well.
MACD is on a buy signal. And the cloud is green and pointing upwards too.
Yes, the stock is overbought and may come to a couple of down days over the coming sessions. But volume levels are not huge on the down sessions, and I think this is just more of a consolidation period that’s going to be happening for the Gap. But making its way eventually up towards this $30 level.
I can see the pattern coming around looking like this. Maybe down a little bit here, going a little bit sideways, and working its way up slowly past the recent highs from a couple of days ago. And then making a nice run up with higher highs and higher lows towards this $30 level.
It would be a good stock – you buy, you hold it, you don’t have to trade the stock for a while here. But I think over the long period of time – let’s call it three to five months – the stock’s going to make its way up towards that $30 level for a nice 20% gain.
That’s the Gap. Have a great day everyone, and I’ll see you guys next time.
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