Hewlett-Packard Company has been all over the news and Internet lately. The interesting thing is, I think the technical analysis is starting to justify some of the buzz.

It appears an inverted head-and-shoulders has formed. HPQ had an exhaustion gap in the late part of November 2012. I say exhaustion because it was filled. Then perhaps a breakaway gap started off the 2013 year with a bang, well, in this case a gap. Then recently, there was a continuation gap. HPQ is forming a text book pennant pattern. We have declining volume, higher lows and similar highs.

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HPQ had a solid close above both the 100 and 200 simple moving averages. My thoughts are simple; a move higher and HPQ should continue bullish. This is also where some could begin to speculate the longer term potentials of HPQ as a bullish probability.

We have all the signals of a trend reversal. I believe the strongest resistance of $21.50 will be a quick target to reach. If we get a solid close above that resistance, the future implications of HPQ could be quite bullish indeed. When you have time, take a look at the 2002 – 2007 pattern and wave structure. Something very similar looks like it could begin to shape up.

SHORT-TERM PLAY

For shorter term traders, simply keep an eye on the candle I designated with the black arrow.

If your analysis confirms and you are triggered into this trade, especially with call options think about taking some profit around $20.25. Sure, it’s not a huge move, but with that one candle and the slight resistance there is a small battlefield the buyers need to conquer. It’s all about trading your plan, my friends. Enjoy!

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