AECOM Technology Corporation, together with its subsidiaries, provides professional technical and management support services for public and private clients in worldwide. The company operates through two segments, Professional Technical Services (PTS) and Management Support Services (MSS). The PTS segment offers planning, consulting, architectural and engineering design, and program and construction management services for a range of projects, including highways, airports, bridges, mass transit systems, government and commercial buildings, water and wastewater facilities, and power transmission and distribution. The MSS segment provides program and facilities management and maintenance, training, logistics, consulting, technical assistance, systems support and integration, technical personnel placement, and field services primarily for agencies of the United States government.
ACM has confirmed a head and shoulders (H&S) pattern. Please take a look at the 1-year chart of ACM (AECOM Technology Corporation) below with my added notations:
After going almost nowhere this past year, ACM created a key level of support at $28 (blue). That $28 level was also the “neckline” support for ACM’s H&S reversal pattern. Above the neckline you will notice the H&S pattern itself (red).
Remember, patterns such as an H&S need to confirm to have the meaning that they imply. Confirmation of the H&S would occur if the stock were to break below its $28 support, and as you can see, ACM did exactly that last week.
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The Tale of the Tape: ACM has confirmed a head & shoulders pattern and should be moving lower. A short trade could be entered on any rallies up to or near the previous $28 level. A break back above $28 would negate the forecast for a move lower and create an opportunity for a long trade.
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
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