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Over the years, I've read over and over again that consolidations in an uptrend were a healthy phenomenon. Inability to break down meant investors (basically) have every faith in a companies abilities and find value at the current price. After a consolidation (the longer the better) a move higher would come. Let's look a few examples: (click all charts to enlarge)
AAPL is very well known for it's consolidations, or taking a "rest" before moving higher as this weekly chart reveals. Investors clearly believed in their innovation and were willing to add to positions during these consolidation periods; thus holding up the price and holding the range. That's called appetite, right there.
In fact, the longer the consolidation, the greater the move holds true; especially when you take a look at the biotech ETF IBB. After it's debut as a new ETF, investors found value in it at $40 and began to accumulate. After a brief reversal up, held it in consolidation for an amazing eight years. Again the longer the consolidation, the greater the move and it's been a remarkable run.
Now this consolidation in internet security provider FTNT intrigues me. Go figure; internet security threat provider. I don't think demand is going to wane on that area, do you? It seems to me that investors have said "ok, I'll buy it at $16-17" and for two years it's been held rangebound. Will this be a sector of strength going forward? With this type of action, I really have to wonder.
(Full disclosure; yes, I'm accumulation on these dips)
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