Amphenol Corporation provides electrical, electronic, and fiber optic connectors; interconnect systems; and coaxial and specialty cables worldwide. Its Interconnect Products and Assemblies segment produces interconnect products, such as connectors for electronic or fiber optic transmission; assemblies, which include a system of cables and connectors for linking electronic and fiber optic equipment. This segment’s connector and cable assembly products are used in communication applications, smart card acceptor and other interconnect products, set top boxes and other applications, fiber optic connectors, backplane and input/output connectors and assemblies, sculptured flexible circuits, hinge products, and other wireless communication devices. The company’s Cable Products segment offers coaxial cable and connector products for cable television systems, including full service cable television/telecommunication systems; radio frequency and fiber optic interconnect components for full service cable television/telecommunication networks; and data cables and specialty cables to connect internal components in systems.
To review a current H&S pattern on Amphenol’s stock, please take a look at the 1-year chart of APH (Amphenol Corporation) below with my added notations:
APH had rallied from a low of $58 in October to a peak of $85 in July. Over the last (4) months the stock had created a very important “neckline” of support at $75 (navy), which was also a common area of resistance back in March-April. Above the neckline you will notice the H&S pattern itself (blue). Confirmation of the H&S occurred earlier in the week when APH broke its $75 “neckline”. So, the stock should be moving lower overall from here.
Keep in mind that simple is usually better. Had I never pointed out this H&S pattern, one would still think this stock is moving lower simply if it broke below the $75 support level. In short, whether you noticed the pattern or not, the trade would still be the same: On the break below the key $75 level.
The Tale of the Tape: After rallying higher for (10) months, APH confirmed a head & shoulders pattern. A short trade could be placed now, or could be entered on any rallies up to or near the $75 area. A significant break back above $75 could negate the forecast for a move lower.
Would you like assistance in making your TBS trades? If so, email me at Christian@yolopub.com and let’s talk about working together one on one!
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!
Christian Tharp, CMT