AXL American Axle & Manufacturing Holdings Poised for Breakout

AXL has a very nice large pattern in the form of an inverse head and shoulders bottom.  This is a high reliability pattern and it is occurring over a time frame of 1.5 years which makes its breakout implications very significant.

AXL20100104

The right shoulder portion of the pattern has a saucer or scalloping type formation and is set up for a nice breakout move above the key horizontal neckline level defined by the red dotted line on the chart.

In addition, it is noteworthy to point out that AXL has a short position in it that is somewhere north of 30% of the float.  This is important within the context of this large pattern because it could provide the necessary fuel and volume for a sustained meaningful breakout.

AXL is an auto parts supplier.  The entire auto sector still appears to be in recovery mode.  You just have to look at the shares of F Ford Motors or another auto parts supplier (DAN) to get the picture that this sector is in sustained recovery mode.

If AXL is able to get a breakout going above the red dotted neckline I would like to see it do it on greater than 12 million shares.

Posted in Stock Picks, Stock Setups, Technical Analysis
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