Reversals Are Percolating

American Axle & Manufacturing (AXL) spent the month of October forming a declining triangle pattern, in a countertrend to the rising broader market. However, last week the stock price broke trendline resistance and today it's taking out its 50-day moving average. Moving-average convergence-divergence (MACD) has made a bullish crossover, and the relative strength index (RSI) is above its centerline. In addition, this chart is showing clearly defined resistance-turned-support that has been broken to the upside.

American Axle (AXL) -- Daily Source: View Chart » View in New Window »

However, the most important technical condition is the continued improvement of money flow. The Chaikin money-flow indicators turned positive at the beginning of this month, and while overall volume is light and will need to improve if the breakout has legs, there is more net buying interest vs. selling interest. Shares of American Axle have risen about 5% since the breakout, and may need to do a bit of consolidating -- but support in the $19 area is being supplied by a horizontal trendline and the 50-day moving average, thus offering a point around which to trade....223 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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