Conclusion, Investment Implications, Strategy

Accenture Ltd (ACN) appears to be resuming its larger 2020 advance following two months of sideways investor indecision.  A sustained rise above the $224.40 area would target an additional 12% rise to $262.50 per share.

Analysis and Rationale

Accenture Ltd (ACN), a professional services company, provides strategy and consulting, interactive, and technology and operations services worldwide. The company also provides outsourcing services. It serves communications, media, high tech, software, and platform companies; banking, capital market, and insurance industries; and consumer goods, retail, travel services, industrial, and life science industries, as well as clients in health, public service, chemicals and natural resources, energy, and utilities sectors. Accenture plc has alliance relationships with Adobe, Alibaba, Amazon Web Services, Blue Yonder, Cisco, Dell, Google, HPE, IBM RedHat, Microsoft, Oracle, Pegasystems, Salesforce, SAP, ServiceNow, VMWare, Workday, and Massachusetts Institute of Technology. The company was incorporated in 2009 and is based in Dublin, Ireland.

Chart 1 below plots ACN daily since May, highlighting its Nov 5th breakout higher from two months of sideways investor indecision.  A sustained rise above the upper boundary of the indecision area, currently at $230.00, would confirm the breakout and target an additional 12% rise to $262.50 per share.

ACN has maintained a statistically significant and stable positive correlation to the benchmark S&P 500 (SPX) throughout the past 15 years, most recently an essentially lockstep 0.94 over the past 6 months.  Per the correlation, as goes ACN from here so is likely to go the US broad market.

Chart 1

Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $224.40 area, a long entry price of $233.93 would provide a 1:3.0 risk/reward ratio (risking $1.00 to make $3.00) with an initial risk of 4.1%.

Table 1


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