An Aerospace Stock Ready to Take Flight

01/28/2011 7:07 am EST


Spirit AeroSystems Holdings, Inc. (SPR) recently triggered out of a symmetrical triangle pattern that formed over the past year. The breakout occurred with a surge in volume, which lends confidence to the validity of the pattern. There is a minimum expected price objective of $29, which is obtained by expanding from the breakout the same distance as the height of the pattern.

Currently, SPR is forming a bull flag pattern that may provide a low-risk/high-reward long entry opportunity. The trade will trigger with a daily close above the upper resistance line, which is $24. That $24 level was an important resistance point in mid-2008 and in the first quarter of 2010. A move above $24, therefore, will be significant.

Below is a weekly chart of SPR displaying the symmetrical triangle pattern that began forming in February 2010.

Click to Enlarge

Next, we’ll observe a daily chart of SPR highlighting the recent bull flag pattern that has been developing over the past seven sessions. A breakout above the flag’s resistance can provide a low-risk long entry opportunity.

Trade Trigger: Daily close above $24
Target: $29
Protective Stops: Conservative - Confirmed move below $22; Aggressive - Confirmed move back below the flag’s base.

Click to Enlarge

By Zev Spiro, trader,

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