Along with US Steel (X) and other sector-related stocks, AKS has been trying to recover, not only from its 2011 Smackdown, but from a multi-year bludgeoning.
After a stock crashes, it normally needs time to build a base and to recover. Bear Market rallies can be vicious and can result in big percentage gains, but if there isn't any base-building along the way, they usually fail and get called back for some kind of retest of the crash low, which sometimes gets taken out to the downside.
AKS has done some decent base-building during the past several months. On December 15, the stock established Data Point #4 for TWO patterns: (1) the small Symmetrical Triangle (in blue) and, (2) the large Ascending Triangle (in black), at 7.30. That's now KEY SUPPORT.
The AKS Bulls got 2012 off to a nice start with a breakout of the Symmetrical Triangle on a Breakaway Gap, putting an upside target of 10.75 IN PLAY. There's a gap left in the chart from 8.23. Gaps always are bothersome because they leave us wondering if they're going to get filled, or not. "Common Gaps" tend to get filled rather quickly. "Breakaway Gaps" out of a pattern tend not to get filled as quickly. They can take weeks or months to get filled, and sometimes they don't get filled for years, if at all.
After the breakout, AKS temporized with highs in the high 8.80's and low 8.90's (horizontal green line), establishing a small Ascending Triangle, just below the top of the larger Ascending Triangle (in black). On January 10, the stock broke out above it, putting a target of 10.77 IN PLAY, very near the 10.75 target IN PLAY from the Symmetrical Triangle breakout (pattern in blue).
On January 11, AKS broke out the big Double Nested Ascending Triangle on an upgrade to $12 out of Credit Suisse. The "Double Nested" is my own terminology, meaning that there are two smaller patterns within the larget Ascending Triangle that have broken out.
Credit Suisse's price target of $12 and timeliness of the call, right after AKS broke out of TWO patterns, has me wondering if they're leaning more toward the technicals than the fundamentals because we can see that horizontal resistance is "right there," from 11.34-11.96, and the Ascending Triangle target of roughly 13.20 gives them some room. They stepped up to the plate with the call before the release of earnings, too.
Cramer didn't like the call out of Credit Suisse, which might have had something to do with the more tempered response from the market in the days following the breakout. Who knows, huh?! To date, AKS has pulled back to the a low of 8.93, just above the top of the smaller Ascending Triangle (in green), and has held up, so far. The targets are IN PLAY as long as the stock trades above the breakouts. Back below them, it's "Ye Olde Knuckle-biter" for the AKS Bulls and the targets go ON HOLD unless/until the stock gets back above the breakouts.
Bigger picture, we can see that the $12 target from Credit Suisse is a bit of a "gimme" if the AKS Bulls have anything at all. The technicals have shaped up nicely and are good to go if AKS can announce decent earnings which, according to Yahoo Finance, will be released before the market opens tomorrow, January 24. Check me on that, if you're interested.
Bigger, BIGGER picture...we've looked in the past at many examples of "Ye Olde Parabolic Rally...Ye Olde Parabolic Return," but this is one of the more stunning of them. They even took out the low of the Cup & Handle before AKS bottomed, erasing ALL of the gains for anyone who bought inside that pattern, or at any time thereafter. Have mercy!
Market Lesson: "Know when to fold 'em" (Use some kind of stop loss exit strategy, before you're bled to death).
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