Ashland ( $ASH ) Breaks Out

Specialty Chemical maker Ashland ($ASH)  is breaking out from a bullish flag and offers a solid objective entry and risk / reward for a LONG.

The Set-up

From the Daily chart you can see that Ashland made a powerful 3-week bullish move in early May and has consolidated in a bullish flag for about the last 10 days. Price is now breaking higher from that bullish flag.  Technicians like myself are fond of the saying “Flags fly at 1/2 staff” meaning that after the consolidation flag, stocks tend to go higher once they break out. The projected measured move is shown on the chart.

From the Weekly Chart we see the price bounce off of channel support and moving higher. In the lower panels of the chart we see that $ASH is significantly out performing the Specialty Chemical Group and has positive relative performance vs SPY as well. Strong momentum and RSI profiles in both Daily and Weekly Charts tell me this wants to move higher.

The Trade

I like Ashland long here. The Daily and Weekly charts are in sync and both are bullish. The strong bull flag projects a strong move higher. Doesn’t mean we are assured of that, but we have a clear line near by to shoot against…. $79.   My initial target T1 is $83 with T2 being $88-$89 at the top of the Weekly Channel.  I like the risk / reward of this opportunity and would place a stop at around $78.50 on the daily chart.

Option Traders should consider the   $ASH  JUL 80 / 90 call spread priced at around $2.00 with the common trading $79.30.   Use limit orders and be patient for a good fill.

Good Luck and Hope it helps

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