RSH (Radio Shack) pre-opening on March 4, 2014 Point and Figure chart. Chart courtesy of Dorsey Wright & Associates.
When support lines are broken, we need to pay attention. This particular chart broke the support line over three years ago, in August 2010. When support lines are broken, sometimes the move is so gentle, so slight, you might even miss it, or tell yourself “I’m going to give this a few days, few weeks and see what happens.”
Fast forward to today, the company announced massive losses, and plans to close 1100 stores. Headlines on business websites state the “stock is crashing!” Last night, the stock closed at $2.72. The support line was broken over three years earlier at $17.50.
Support lines (and resistance lines) play an important role in managing assets at Mullooly Asset Management.