Stock Chart Analysis ABK

Posted by downtowntrader | 9/13/2009 05:17:00 PM View Comments

Stock Chart Analysis ABK
Ambac Financial Group, Inc. (Public, NYSE:ABK)

There is an interesting pattern developing in ABK. While I won't speculate as to the fundamental picture for this fallen company, the chart in ABK is following a similar pattern to other "broken financials" such as Citigroup Inc. (Public, NYSE:C), Fannie Mae (Public, NYSE:FNM) and Freddie Mac (Public, NYSE:FRE). Each of these built a long lateral base and eventually cleared it.

ABK is working on the lateral portion of this pattern, and has been consolidating for several months after a horrific decline last year. Volume has been gradually building on the right side of the base, and ABK is trading in a small pennant over the past few trading sessions. If ABK can clear this pennant, the chances for a full fledged breakout above the entire base are pretty decent. If it can clear the base, a test of the October Highs near $4 is a possibility.

As with any trade, please exercise due diligence to see if this setup conforms to your trading plan.

Good Trading,


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