Near Perfect Ratings And Upward Trend Channel Are Good News For Abbott Labs

Less than a $20 Spread Between the Top Rail and the Lower Rail

I mentioned already that Abbott has been moving higher within a trend channel. The channel started at the beginning of last April and it defines the various cycles within the overall upward trend. One of the things that impressed me most about the channel was how tight the channel is. It is approximately $18.70 from the lower rail up to the upper rail.

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We see how the stock hit the lower rail in June of last year and again in December and January. The lower rail is currently just above the $115 level. The upper rail connects the closing highs from last April, August, and in February of this year.

The overbought/oversold indicators were in overbought territory back in February and they dropped as the stock went through a three week losing streak at the end of the month. The 10-week RSI dropped down to around 55 and has since turned slightly higher. The weekly stochastic indicators dropped to around the same level and have since made a bullish crossover.

Looking at the moving averages we see that the stock is hovering just above its 13-week moving average and the 13-week is $14.31 above the 52-week moving average. The trend higher for Abbott has been so consistent that the 13-week has been above the 52-week since February of 2017. The two almost made a bearish crossover last spring, but they never quite got there.

Bullish Sentiment Seems Warranted

Looking at the sentiment toward Abbott, the overall picture seems to show quite a bit of optimism, but that seems to be warranted. There are 22 analysts covering the stock at this time and 18 have it rated as a “buy”. There are two “hold” ratings and two “sell” ratings. As a percentage of the total, the buy percentage is 81.8% and that is higher than the average stock. The buy percentage for most stocks is in the 65% to 75% range.

The short interest ratio on Abbott is 2.5 and that’s a little below average. Even though the ratio is lower than the average stock’s, the short interest did jump sharply from mid-February through the mid-March reading. The number of shares sold short went from 10.5 million to 12.7 million. Seeing the short interest increase by over 20% in a month is a sign that there is some sense of bearish sentiment.

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