ASO - possible cup & handle

ASO is an excellent small cap in the consumer discretionary sector. They're very well managed, having been profitable with steadily improving fundamentals since their 2020 IPO. 12 month consensus price target is $67-68.

ASO has bounced back from the low in June, forming a cup and handle pattern. While I'm typically not a big fan of cup and handle patterns due to their higher failure rate compared to other patterns, this formation on the daily chart is fairly textbook. I would prefer to see the right lip of the cup slightly higher than the left, along with a bit more volume on the right lip. However, the depth and duration of both the cup and the handle are satisfactory, and the volume progression is strong for the majority of the formation. Another positive sign is that the handle has treated the 200-day Simple Moving Average (200SMA) and Volume Weighted Average Price (VWAP) from the All-Time High (ATH) as support.


I plan to enter on a breakout of the handle about $59, take profit at $64 before the April 27 gap down in price, and then look for a retest below the handle for additional accumulation.

Order cancelled:

*** Opportunity invalidated ***

Update 08/10/23
This analysis will serve as an excellent example of why confirmation is critical for a cup and handle play. We never got a full candle close above the handle and price action retraced below the 200SMA.

ASO remains a great long term consideration, but requires monitoring for a different signal for a momentum trade.