Deckers Outdoor (DECK), manufacturer of the very comfortable shoes and sandals that many of us wear, broke out of a three year base on October 29th, 2010. The stock is up 47.6% since and for less than 1.5 months that is hardly an easy feat.
What Deckers built prior to breakout was a solid foundation. Just like a house is capable of lasting over 100 years and beyond on a strong foundation of cement, by CANSLIM standards Deckers is built on a very strong foundation of its own. Fundamentally and technically this stock was prepped for great returns and may very well continue to deliver moving forward.
By applying some technical analysis and taking a closer look at both a daily and weekly multi-year view of Decker’s stock chart we can break down the key points that drove the recently large returns. Below is both a 3 year weekly chart alongside a 9 month daily chart.
1. After having a strong start to the 2010 year, Deckers breaks out again on huge volume. Not even two weeks later though the stock was already trading back below its buypoint, signaling an end to the trend.
2. After a month and a half of consolidation the stock attempted another breakout on strong volume. The stock claimed higher highs and pierced $55 but again struggled to keep momentum.
3. With a peak of $56.17 on June 21st, Deckers spent the next 4.5 months creating a long term horizontal base that allowed the stock to naturally shake out weak holders. This is what the previous two consolidations lacked, proper time. The stock also split 3 for 1 on July 6th.
4. In late September and throughout October Deckers began to creep up back towards the mid $50s on lower volume. With an established multi-month base in place all that was needed now was another heavy volume break to begin the next big leg up.
5. On October 29th DECK stock gapped above the previous 52 week high of $56.17 and closed at $58.10. It was (at the time) the third largest volume session for the year. More importantly this was a fresh all-time price high for the stock. A three year Cup & Handle base on the weekly had just been broken.
6. A short bull flag formed which presented a follow up buypoint at $63.65. Buyers came in strong once again to support the stock and it has not looked back since.
More stock chart examples and lessons below.
- Example 21: How Akami’s (AKAM) Stock Chart Foretold its Earnings Miss
- Example 20: 6 Lessons / Reminders From My 23% Profit in EZCH
- Example 19: Deckers Outdoor (DECK) <–- Currently Viewing
- Example 18: A Closer Look at Chipotle’s (CMG) 150%+ Run this Year
- Example 17: Dryships Stock Offers 5 Valuable Lessons For All Investors
- Example 16: The Rise and Fall of Crocs Footwear