That is the only explanation I can come up with for the stock prices of two gun manufacturers, Sturm Ruger, $RGR, breaking out to all time highs, and Smith & Wesson Holdings, $SWHC, at 2 year highs and looking ready for more, while the hunting store chain Cabela’s, $CAB, has been stuck in a rut for a year. Gun buyers must be having a gunfight in the hunting store. Check it out.
Sturm Ruger, $RGR
Many analysts noted the strength in Sturm Ruger, $RGR, and some the break out above the ascending triangle formed by the 100 day Simple Moving Average (SMA) and the resistance at 36.80 last Friday. It is consolidating now with a Measured Move higher to 44.20, but still has room to the target of the pattern breakout at 48.50 above that.
Smith & Wesson Holdings, $SWHC
Smith & Wesson Holdings, $SWHC, was an earnings play in the premium site in early December and it has been running higher ever since. It is in a bull flag now consolidating over a 161.8% Fibonacci Extension of the move lower from July through to October. The next target is the 200% Extension at 5.07 and a Measured Move to 5.20.
Cabela’s, $CAB
But Cabela’s, $CAB, limps along under falling trend line resistance creating a tightening range. All of the SMA’s are now moving sideways with a Moving Average Convergence Divergence (MACD) indicator giving little guidance and a Relative Strength Index (RSI) that can’t decide if it wants to be bullish or bearish. It will take a move over that resistance at 26 to get legs and create a target of 34.50 on a break of the pattern. A fall below 23.80 takes it back to the long term support/resistance at 21.58.
Can the continued strength in the gun manufacturers pull $CAB higher, or will it act as an anchor and pull them back lower. Time will tell.
*Post courtesy of Greg Harmon of Dragonfly Capital.
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