Abbott Laboratories (NYSE: ABT)

Abbott Laboratories engages in the discovery, development, manufacture, and sale of health care products worldwide. The company offers adult and pediatric pharmaceuticals for rheumatoid and psoriatic arthritis, ankylosing spondylitis, psoriasis, juvenile idiopathic arthritis, and Crohns disease; dyslipidemia; HIV infection; prostate cancer, endometriosis and central precocious puberty, and anemia caused by uterine fibroids. It also offers diagnostic systems and tests, such as immunoassay and clinical chemistry systems; assays for screening and/or diagnosis for drugs of abuse, cancer, therapeutic drug monitoring, fertility, and physiological and infectious diseases; instruments that automate the extraction, purification, and preparation of DNA and RNA from patient samples, and detects and measures infectious agents; genomic-based tests; hematology systems and reagents; and diagnostic systems and tests for blood analysis. In addition, the company provides coronary, endovascular, vessel closure, and structural heart devices, such as drug-eluting stent systems, coronary metallic stents, balloon dilatation products, coronary guidewires, carotid stent systems, valve repair systems, and drug-eluting bioresorbable vascular products.

Please take a look at the 1 yr. chart of ABT (Abbott Laboratories) that I have shown below with my added notations:

1 yr. chart of ABT (Abbott Laboratories)

ABT has formed a nice up-trending channel over the last (9) months. A channel is simply formed through the combination of a trend line support that runs parallel to a trend line resistance. When it comes to a channel, I always tell my students that any (3) points can start the channel, but it’s the 4th test and beyond that confirm it. You can see that ABT has multiple test points between the channel resistance (red) and channel support (blue). Following the ABT Channel can provide you with both long and short trading opportunities.

The Tale of the Tape: ABT has formed a common chart pattern know as a channel, in this case, an up-channel. A long opportunity could be entered on a pullback to the channel support, which at this point seems to be around $66. Short trades could be entered at channel resistance OR if ABT were to break below the channel support.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT