Mohawk Industries (NYSE:) has been tracing out a narrow bull flag pattern this month. This healthy consolidation has a very solid base underneath. After battling a heavy 200-day moving average the entire year, MHK has spent all of October above it. Next week, the 50-day moving average will cross above the 200-day moving average, usually a very bullish development. The stock is also well below overbought levels despite sitting near four-month highs. We believe MHK is set up well for more upside. On the downside, a close back below $97.00 would violate this week’s low, sending a clear warning sign that more sideways action is ahead.
Earnings are due Oct. 29 after the bell.
Note: We have no position.
You can read Gary S. Morrow’s original post here.
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