Red Hat Inc. (RHT) - Get Report has continued higher despite our concerns earlier this month, where we said, "RHT has nearly doubled from its late 2016 nadir. Can prices continue to levitate higher? Sure. I underestimated the strength before. Maybe I have a fear of heights? Again, we do not have a distribution pattern, so traders will need to be alert for a possible key reversal or a two-day reversal if these overbought readings actually translate into a correction."
RHT has not made a new 52-week high as of Friday but it is trading up on the day. Let's go back to the video tape.
In this daily bar chart of RHT, above, we can see that prices are still above the rising 50-day moving average line. The 200-day line is, of course, still positive. The daily On-Balance-Volume (OBV) line has been climbing all year and it continues to signal more aggressive buying.
The 12-day momentum study shows higher highs from late August to October. These higher highs are not diverging from the higher price highs in recent months.
In this weekly bar chart of RHT, above, we can see that price are above the rising 40-week moving average line, still maybe too far above the line. The weekly OBV line is bullish as is the Moving Average Convergence Divergence (MACD) oscillator.
In this long-term Point and Figure chart of RHT, above, shows a big upside price target of $227 but old highs around $150 need to be reached first.
Bottom line: Despite my fear of heights it looks like Red Hat is heading higher.
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