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Take a look at Fruit of the Loom (FTL). The stock has been on a
short-term downtrend since the high of 3/20/97. It has come down to
its long-term uptrend line.
I draw the long term uptrend from 11/21/95, through 7/22/96, 5/8/97,
and 5/16/97. This line almost exactly overlaps the 200-day Moving
Average. Unfortunately, that line is violated twice. First, for two
days in the July 96 sell-off, and again for two days in the March 97
sell-off.
As an alternative, you could draw a line through the lows of 7/16/96,
and 4/13/97. This line is parallel to the 200-day MA, but just a
little lower.
If FTL breaks through the short-term downtrend line, we should see a
pretty good move up. I have a buy Stop order in at 37 1/2 for today,
which I don't expect to see executed. Tomorrow, I will place one at
37 1/4.
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