Although this is a small ascending triangle the stock seems to have lost some of its' strength. If it breaks above 46.50 with volume it could gain 3 points or so. If it breaks down below and closes below 44 with volume it may retreat to support at 38. Wait and see what the stock wants to do.

Two possibilites come to mind:
1. Continuation pattern in the form of an ascending triangle top line starting on 10/4 bottom starting on 10/6.
2. Potential reversal with a potential triple top as this is the third run at an attempt to break through resistance. The divergence on the on balance volume to the higher price action also supports the idea that keeping an eye out for weakness is warranted.

I have owned this as a stock since the break out on 3/1/06. Stops are tight as earnings are coming on 11/14.

Ok, AEOS appears to be consolidating at an all time high. It also has a small ascending triangle and an earnings release coming up in two weeks. Additionally, this stock had a stock split on 3/7/2005 around $56. So, if you beleive that this stock is getting close to another split, I might buy the stock. Otherwise, I would be willing to play the breakout upbove $47 on high volume. I would buy the DEC $40 Call. I would exit if the stock retraced below $47.

If I buy the stock, I would again buy on a breakout above $47 and hold through the earnings release (expecting the split announcement) and buy a protective put before earnings to cover any potential losses (if the trade goes against me).

-M

There is bearish divergence showed by momentum indicator. plus the volume was decreasing while it attempting the triple tops. It could still break up above the asc. triangle (or the flag) I will enter to see which side it breaks with volume. Will buy ITM call/put for Dec as it is about 3-4 point play.

Divergence on the MACD. Triangle with top at arround 46.3 (could also call it tripple top). if the breakout from the triangle occurs I would look for volume for confirmation otherwise I will not take this trade. If the volume is there then there is a 3 point move up. If on the other hand the stock moves down past the previous low of 44.7 with volume a bearish trade can be taken for a possible 2 point move downward. For the bullish move the Nov 50 call has a delta of .25 so a 3 point move might only give me a 1 point result. A bull put spread of nov 45/40 might be better. For a bearish trade the Nov 45 put would be good.

Pros: strong stock in strong group moving up the big chart. Still in uptrend with higher lows in tact. MACD and Stochastics heading up and it recently found support at the 30 day MA.
Cons: Strong resistance at 46.60 set by big volume up day on 10/4 that was drastically swatted down. That line was confirmed by a Doji star of sorts followed by a down day making sort of an evening star reversal formation. That also happened at the back side of the former uptrending support line established from the daily lows(shadows)of 8/2 to 8/29. Though not a dramatic candle, that line was broken on 10/18 with heavier volume than the days leading up to it. Volume slightly higher on the selling side in October so far.
I don't really see an asc. triangle, but you could probably argue for a very thin one about three points wide. I wouldn't.

An upside directional play would be playable in the event of a big volume move above 46.60. However, the target is not clear to me as it seems to be flattening out and earnings is just over 3 weeks away, so that's not a lot of time.
Seems like it would be difficult to find an attractive trade in the short time before earnings. Sell the Nov 45/40 maybe on a breakout in the next few days, but beyond that, it'll be hard to get a good premium.
There's my take. Sorry if I wrote a Novel. ;)
Matthew

This retail stock is its 52 week high. With indices are making higher highes, i would buy OTM option and sell it before earnings announcement, if it breaks above the asc triange supported by above average volume.

I would take advantage of increasing volitality before earnings.

raaj

I see an asc, tri. if it breaks above 46.50 with heavy vol. I would expect a min. move of 3.50. Looking at the options table today I would buy dec 50 I would hold over earnings because it is an uptrending stock in uptrendding industry and christmas shopping is starting. I would set a mental stop at 46

I see an acsending triangle that is
wound up pretty tight, If it breaks
to the upside with good volume I
would enter quickly.As far as which
month november, since I dont have
a good understanding on forecasting
implied volatility (it seems to be
dropping)I would have to go in the
money even though its $$$$ and the
reward is less attractive but still
ok for me at about 50% on a 3 point
move. Steve L

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