AAON) looks "toppy" right now. Shares of the heating and air conditioning stock have been the exception to the other names we've looked at today -- this stock has enjoyed supercharged performance in 2013, rallying more than 74% from the start of January. But that sprint could be coming to an end.
That's because AAON is currently forming a double top, a price setup that's formed by two swing highs at the same level -- a move through $21.50 support signals that AAON is toxic and it's time to sell. That doesn't mean that this stock's outcome isn't a foregone conclusion from here; a move above those $26 previous highs negates the downside setup.
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Whenever you're looking at any technical price pattern, it's critical to think in terms of those buyers and sellers. Double tops, triangles, and other pattern names are a good quick way to explain what's going on in a stock, but they're not the reason it's tradable. Instead, it all comes down to supply and demand for shares.
That support level at $21.50 is a price where there had been an excess of demand of shares; in other words, it's a place where buyers were more eager to step in and buy shares at a lower price than sellers were to sell. That's what makes a breakdown below $21.50 so significant -- the move would indicate that sellers are finally strong enough to absorb all of the excess demand above that price level. Wait for that indication before you sell.