Shares of Apollo Group Inc., a for-profit education company that operates the University of Phoenix, rose on Thursday and helped send the index to a higher finish.
The index, which includes 100 of the largest nonfinancial securities listed on the Nasdaq Stock Market, rose 32.91 points, or 1.8 percent, to 1,841.42. The broader Nasdaq composite added 40.86 points, or 1.7 percent, to 2,389.86.
Apollo, like numerous other education stocks, ended higher, as signs of weakness in the U.S. labor market helped to re-ignite interest in the sector. Apollo gained $6.23, or 8.5 percent, to $79.74.
Implication
An Ascending Continuation Triangle is considered a bullish signal. It indicates a possible continuation of the current uptrend.
Description
An Ascending Continuation Triangle shows two converging trendlines. The lower trendline is rising and the upper trendline is horizontal.
This pattern occurs because the lows are moving increasingly higher but the highs are maintaining a constant price level.
Important Characteristics
Following are important characteristics about this pattern.
Technical analysts pay close attention to how long the Triangle takes to develop to its apex. The general rule is that prices should break out - clearly penetrate one of the trendlines - somewhere between three-quarters and two-thirds of the horizontal width of the formation. The break out, in other words, should occur well before the pattern reaches the apex of the Triangle. The closer the breakout occurs to the apex the less reliable the formation.
The Triangle is a relatively short-term pattern. It may take between one and three months to form.
The horizontal top trendline need not be completely horizontal but it should be close to horizontal.
Investors should see volume decreasing as the pattern progresses toward the apex of the Triangle. At breakout, however, there should be a noticeable increase in volume.
Consider the duration of the pattern and its relationship to your trading time horizons. The duration of the pattern is considered to be an indicator of the duration of the influence of this pattern. The longer the pattern the longer it will take for the price to move to the target price. The shorter the pattern the sooner the price move. If you are considering a short-term trading opportunity, look for a pattern with a short duration. If you are considering a longer-term trading opportunity, look for a pattern with a longer duration.
The target price provides an important indication about the potential price move that this pattern indicates. Consider whether the target price for this pattern is sufficient to provide adequate returns after your costs (such as commissions) have been taken into account. A good rule of thumb is that the target price must indicate a potential return of greater than 5% before a pattern should be considered useful. However you must consider the current price and the volume of shares you intend to trade. Also, check that the target price has not already been achieved.
This pattern with its increasingly higher lows and constant highs indicates that buyers are more aggressive than sellers. The pattern forms because of a supply of shares is available at a fixed price. When the supply depletes, the shares quickly breakout from the top trendline and move higher.
From A Current Subscriber This Week
John,
I made over 5000 dollars this week.....that is a lot of money for me. It will pay the bills for nearly 3 months. I am excited about how you call the plays in the room. Thank you....looking forward to many more great days! :)
Gary
APOL "Ascending Continuation Triangle" Breakout Play
