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Time Warner Inc (NYSE:TWX) – Accumulate On Dips With SL Below $60

Time Warner Inc (NYSE:TWX) (Closed: $66.20, Up: 2.05%) opened flat but soon gathered momentum to rally to hit a new 6 year high and closed near the high. The news about the company willing to offer HBO Go through a third party ISP encouraged the buyers as it made its third consecutive positive close. The volume at 7 million remained much higher than the average volume of 4 million. The price action created a 3 candle pattern called Three White Soldiers, with very strong bullish connotations though sometimes the price retrace a bit after this pattern before resuming the upmove again.

The stock had a tremendous run in the period of 1996 – 1999, when it rose to an incredible high of $263 from the measly low of $4.19. After correcting sharply about 60% of its value, it bounced back more sharply to record a higher high at $288 in the same year. But the IT bubble burst brought a bear market that never really ended for the stock. It fell like a rock to $26 by the end of 2002 and all the next bull market could do for the stock was to take it to $69.75 by early 2007, not even 38% retracement of the last part of the fall. Obviously the bear market of 2008 brought a new low for the stock at $17.81.

Now the stock is showing initial signs of making a long term reversal as it has broken out of the huge channel containing the entire price action from the 2002 bottom of $26.10. The price has taken a perfect support on the upper boundary this month and made a new high. It is facing the challenge in the $68 – $69.50 zone and another supply zone in $78 – $79 in the coming days. But the investors could accumulate the stock on any dips with a strict stop loss below $60.

Published by Viraj Shah

Viraj Shah has done M.Com (Finance) and currently pursuing CFP. He is a technical analyst who tracks US markets along with other global markets like India very closely. He is very passionate about stocks and believes that money can always be made in market.



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