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Bud Bubbles Over

03/08/04 09:00:56 AM
by Arthur Hill

Anheuser Busch (BUD) is one of the leading stocks in the Consumer Staples sector and the recent breakout speaks volumes on the state of the overall market.

Security:   BUD
Position:   Buy

Graphic provided by: Stockcharts.com.
 
On the weekly chart, BUD broke resistance from a large symmetrical triangle and forged a 52-week high in late February. The breakout is bullish for the stock and the consumer staples sector. Money moving into consumer staples like BUD suggests that investors are adopting a more defensive posture with regards to stocks overall.

As a symmetrical triangle, the upside projection is to 60 by May (black line) and 63 by February 2005 (green line). The gray trendline was drawn parallel to the lower trendline and extends to around 60 over the next few months. This trendline extends further as time progresses and reaches 63 in February 2005. The other projection to 63 was found by adding the depth of the formation (10 points) to the breakout (53 +10 = 63).

BUD is not a quick mover and will likely work its way towards the low 60s over the next several months. The lower trendline of the symmetrical triangle has been touched four times (magenta arrows) and actually extends up from the October 2001 low! As such, this trendline looks like a valid support level and pullbacks (corrections) to this trendline may create future opportunities to partake in the advance.



Arthur Hill

Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.

Title: Editor
Company: TDTrader.com
Address: Willem Geetsstraat 17
Mechelen, B2800
Phone # for sales: 3215345465
Website: www.tdtrader.com
E-mail address: arthurh@tdtrader.com

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