AXON Chart analysis (Hello to Saul's board)

Axon is another great stock that MF got me into long ago. On occasion I trade around my position. This is also a current holding on Saul’s board if any of you hang out there.

Axon used to be Taser and the still sell tons to the police. A while back, they added the Axon body camera to their stable and it has been a huge success. Both pro and anti-police people want the police to have these to either prove the police are good or bad. Either way, sales are great and the Federal government has provided funding for a lot of police forces. My favorite part of the company is their subscription. All video from the body cameras goes into, where it is properly protected so it can hold up in a court of law. For this service, Axon charges police forces a yearly subscription. I believe it is based on amount of storage used, and you can bet it just gets bigger and bigger. Most recently, they have added drones to allow the police to scout and area and collect video from the air. I have great faith this will be a big success and employ all those nerds that spent their childhood playing video games.

Fundamentals are great, and while analysts are only expecting 7% EPS growth this year, it is back up to 29% next year. 30% is preferred in the CANSLIM system. You will notice the IBD rankings are top-notch, with 99 meaning it is better than 99% of stocks.

The chart looks great and is currently in a flat base with a buy point of $325.63, but you can see some lower resistance I marked with pink dashed lines. I would consider buying a partial position there and adding as it enters the buy zone on strong volume. The recent days of this base are showing strong support along the 21dma, not something that can be said of the market indexes. This has occurred with low volume, even on the bug Thursday down day. Today the stock popped up 2.5% with higher volume than recently, though only 1% above average. Given how poorly the market acted today (after Hot CPI), that look very good. If the whole market was strong, I would be buying, but I am already over invested for the current conditions. (I have moved to a lot of cash in my “Saul” account, so maybe I will start adding there).

Look at that y/y EPS and sales growth in the table along the bottom. Incredibly strong. A hot CPI and “high for longer” does not impact Axon. It does not matter if a consumer can’t pay the electric bill or their credit card, the police and Feds keep on buying.

On the weekly chart, we can see that the RS of 92 has a blue dot. This means the stock is making new RS highs as it is near a buy point. IBD’s historical analysis shows this coincides with a lot of winning stock. Those blue highlighted areas on the chart are a 3-weeks-tight pattern. IBD research shows these are often a good sign of things to come. If the occur after a breakout, they can act as a place to add a small bit in pyramiding up. (you don’t add in the pattern, but when the price breaks above the pattern). If it is before a breakout, it can give you added confidence that the breakout has a better chance.


I added to my position in my Saul account because I had raised cash there and already held a non-IBD position. I will track this part of the investment with IBD rules and sell if a sell rule kicks it. But given yesterday’s good volume outperformance of the market (up stock, down market), and today’s move into the buy zone, I took a bite. Yesterday would have been more appropriate as a starting position since it popped above the 21dma while the market was “tanking”. I was out most of the morning, so got in late and then it faded a bit, but I am not worried and might add more if it and the market show more strength. Volume was 41% above average, while 40% or more above avg is what Bill O’Neil found to be the correlation with more successful breakouts. That is, you need to see the big boys buying as it goes past the pivot point because you rely on them to take weeks an months to complete their position while you can complete yours immediately if desired. That is, they will support the stock price for a while while they are buying.



What are the IBD rules for buying and selling stocks / ETFs.

Quill - a poor church mouse scratching for a living as a Swing Trader for over 48 years.

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