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Chart to Watch: Hewlett-Packard Company (HPQ)

HPQ is on the verge of bouncing from a historically significant trendline

by 6/26/2014 3:21:02 PM
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Tech hardware giant Hewlett-Packard Company (NYSE:HPQ) has been blazing a steady path higher since last October, with the shares boasting a healthy year-to-date gain of 21%. By comparison, the broader S&P 500 Index (SPX) is up less than 6% in 2014. Currently, as HPQ meets up with a key technical level, the stock could be poised to embark on the next leg of its longer-term uptrend.

Specifically, HPQ is trading just pennies away from its rising 40-day moving average. This trendline has played a significant role in the recent past, according to Schaeffer's Senior Quantitative Analyst Rocky White.

After controlling for several variables -- including the number of sessions the stock stayed above the trendline before meeting back up with it -- Rocky found that HPQ's last nine encounters with its 40-day moving average have generally resulted in gains for the stock during the ensuing five-day and 21-day time frames. Five-day returns have been positive 67% of the time, with an average advance of 2.4%; meanwhile, 21-day returns have been positive 78% of the time, with HPQ adding 5.1%, on average.

HPQ since September 2013 with 40-Day Moving Average

As Hewlett-Packard Company (NYSE:HPQ) continues to climb the charts, the stock could benefit from a round of bullish analyst notes. Despite the equity's outperformance of late, 55% of brokerage firms tracking HPQ maintain a "hold" or "sell" rating. Plus, the average 12-month price target of $36.11 is just a chip-shot away from the stock's current perch at $33.88. Going forward, any upgrades or price-target hikes from this group could help draw more buyers to the table for HPQ.

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