Stock Chart PETM

Posted by downtowntrader | 8/12/2008 09:43:00 PM | 0 comments »

Stock Chart Analysis PETM

PetSmart, Inc. (Public, NASDAQ:PETM)

PETM is a nice example of a confirmed double bottom. A lot of traders see the W forming and assume it's a double bottom, but in fact a double bottom is only confirmed once the stock CLOSES above the neckline (or top of W). A large number of these patterns fail before closing above the neckline, and usually end up forming some sort of descending triangle.

Notice how PETM did in fact close above the neckline. The way to measure a target for this pattern is to measure the distance from the top to the bottom of the pattern. This yields a target of 6 points, which would take PETM near 31. Of course there are no guarantees it ever gets there. Here is a link to double bottoms on a great site for chart patterns and how to trade them.

It looks like PETM is coming back to test the breakout, and with a good chance of market weakness over the next few days, it's quite possible that PETM dips under the neckline, but it's on my watchlist in case it holds in this area and then resumes the breakout.

Good Trading,


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