ARA Update

Recently, I posted about ARA as being a good potential trend trade and I said that it might form a cup and handle break out pattern. The stock has recently pulled back to form the first part of the handle and now the price just needs to breakout to confirm the buy signal. Here's the updated chart.

As you can see from the chart, the OBV is still trending up and the BB Width is still low. Now I would like to see a breakout above the short term resistance (see the red line on the chart) with a higher high in both the OBV and BB Width.

It can be tempting to jump the gun and get into a cup and handle trade before the breakout, but this is a dangerous way to trade. I've seen stocks set up this same pattern before the breakout and then drop like a rock. If you do jump the gun, only buy half the position now and add the other half after the breakout...and also make sure to have a solid stop in place.

As of now, this stock is very high on my watch list and I look forward to seeing how it plays out.

Good luck out there.

TLT