Watching TDG TransDigm Group

It appears TDG is at a key turning point for its longer and intermediate-term trends. Long-term the trend remains higher and only now seems to be returning to its average trajectory. The intermediate trend has been down since October, but we may have seen the turning point recently that could begin the next leg higher.

Monthly

The pattern is robust. The stock consistently finds buyers when it approaches its long-term trend average. Buying near these areas goes a long way to tipping risk/reward more in our favor.

*A monthly signal is not confirmed at this time as December's bar has simply bounced off a low. Follow-through higher next month and a close above this month's high will be necessary to confirm the pattern will continue.

Weekly

The Weekly timeframe remains in a correction (it should be noted most of the lost momentum recently was due to a special dividend of $24/share that was payable November 1st). It is interesting however that the stock has now recovered to the 50 Week SMA and has now traded the last two weeks inside the 12/2 Weekly bar. A move through that high would be a great sign of an end to this decline.

*The Weekly timeframe is not confirmed at this time as price remains with lower lows and lower highs.

Daily

Here is where things get interesting. On 12/2 the stock fell more than $10 early in the session only to rally all the way back and close positive. After a 2-Month decline buyers stepped in and established themselves. This kind of reversal pattern can be extremely powerful, the risk/reward is well defined also. Should the stock trade back through that 12/2 low all optimism for the pattern would be killed off. Above that low however this is a stock to hold, own, add to, etc.

Hourly

Zooming in on the Hourly view we can see how TDG completely rejected lower prices. I call this kind of bar an "F You" bar. Its saying it wants nothing to do with those levels. Stops get run, sellers go short, while the market takes it and flies in the opposite direction.

Moves of this nature, especially those that occur near the long-term trend average, can create monster rewards in our favor for very little risk. This is how we can combine all the timeframes to structure a very solid probability trade and a strong risk/reward.

The Monthly chart is the ultimate reason we like this stock; a pattern this consistent is one we want to participate in as often as possible. This is what it means to identify supply/demand in the market. The key is being able to see when a notable change takes place.

When a change like this occurs it pays for us to notice. We can take an earlier entry point in the blooming trend, then as further milestones are achieved we can expand our timeframe. Hopefully it can become one of those trades we hold for a long, long time.