Hogs, Bats, & Crabs

03/06/2014 7:00 am EST

Focus: STOCKS

Gregory Harmon, CMT

Founder and President, Dragonfly Capital Management

Is there seasonality in stock price patterns in motorcycle stocks, wonders Greg Harmon of Dragonfly Capital? Seems so.

This week last year I wrote about Harley-Davidson (HOG), in a piece titled Hogs and Sharks, as the stock was building a shark harmonic. Today finds it building a bat harmonic (blue). The most important thing to know about the bat harmonic is that it targets for the price to continue higher to 68.88 before a potential reversal zone (PRZ). The funny thing about a bat, though, is that it can morph into a crab (red). Sound like Harry Potter? Well maybe. But if that happens, then the target for the PRZ adjusts higher to 75.87.

chart
Click to Enlarge

What does it take for a bat to morph into a crab? A move in price over 70, the previous high would be a good start. With the move to 68.88 still about 3.5% away, it may make sense to get in now for the short ride and see if the magic works. The rising RSI and MACD both support it happening now. Against Tuesday’s low, all you have to risk is less than $1.

By Greg Harmon of Dragonfly Capital

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