The Jabil Circuit Stock Chart Is Screaming for Higher Prices

jbl stockJBL Stock: Breakout

Whenever anyone asked me what more I wanted out of life, my answers varied, but the theme always involved something big, with tremendous implications. This same theme applies to investing, and when I come across a potential investment that contains a certain characteristic that implies grandeur, it is fair to say that I get excited. I scan hundreds of charts per day looking for a certain characteristic, and I can’t say that I always find what I am looking for. But on occasion, I find a gem. Jabil Circuit, Inc. (NYSE:JBL) stock is that gem, and this investment contains a particularly large technical price pattern that has tremendous implications for JBL stock.

For anyone who is not familiar with my work, I use technical analysis to generate an investment view. This method of investment analysis is based on the notion that historical price and volume data can be used to discern trends and forecast future prices. I have been using this method for close to two decades to produce investment strategies, and I have enjoyed many successes by doing so.

My analysis is predicated on analyzing a price chart, and the following Jabil Circuit stock chart illustrates the price action that served to pique my interest.

jbl

Chart courtesy of StockCharts.com

The price chart above illustrates constructive price action that has been in development since the financial crisis concluded in the beginning of 2009.

Constructive price action consists of impulse waves that advance price, and consolidation waves that serve to unwind overbought conditions and set up the next advancing impulse wave.

It is the time it took for this consolidation pattern to develop that piqued my interest, and it is the reason I am excited about the prospects of this investment going forward. Large patterns that span a long duration are expected to have an equally large reaction once the pattern is completed. The “breakout” that is highlighted on the chart above illustrates when price exited the pattern in an upward direction, indicating that a new advancing impulse wave was now set to develop.

It took five years for this consolidation pattern to develop, and it was only now in March 2017, that JBL stock was finally able to break above resistance. This level of resistance is now a new level of price support, and if JBL shares ever fall back within the consolidation pattern, it would negate my bullish view.

The following Jabil Circuit stock chart illustrates the indicators that helped propel JBL shares to break out of the consolidation wave.

Jabil Circuit stock chart

Chart courtesy of StockCharts.com

In early September 2016, a golden cross was generated. A golden cross is a bullish signal that is produced when the 50-day moving average, highlighted in blue, crosses above the 200-day moving average, highlighted in red. Traders use this signal to confirm a bull market is in development.

This indicator was generated prior to the breakout, and it suggested that such an outcome was a possibility. When a golden cross is engaged, it is not uncommon for price to accelerate, and it is one of the main reasons that I tilt my trading strategies in the direction suggested by this indicator.

On December 16, 2016, JBL stock gapped higher after posting better-than-expected earnings. This gap was a significant event, and is highlighted on the chart above as a “breakaway gap.” These gaps rarely get filled and almost always signal that a new trend has started. In this circumstance, it indicated that the consolidation wave was on the verge of being completed.

After a brief correction, Jabil Circuit stock finally broke out above the level of resistance that had contained it for five years.

The following Jabil Circuit stock chart illustrates the impulse wave that is now in development.
JBL stock chart

Chart courtesy of StockCharts.com

Since late January 2017, a bullish trend has developed. This trend contains the quintessential characteristic of a bullish trend, which is a pattern of higher highs and higher lows. This bullish trend is easily defined using a simple uptrend line. This uptrend line is easily created by connecting the valleys on the price chart.

Using this uptrend line as tool is as easy as it was to create, and as long as JBL continues to trade above this trend line then bullish trend remains intact, and higher prices can be expected to follow.

There was a brief consolidation in late March, where price met a temporary level of resistance. This was just a brief pause before price began its acceleration to the upside.

Bottom Line on Jabil Circuit Stock

I am bullish on Jabil Circuit stock, because it has just completed a very large price pattern that is suggesting that much higher JBL stock prices are on the horizon. My opinion was generated using indicators and patterns using technical analysis, and until this method of analysis suggests that another view is warranted, I will remain bullish.