This growth-oriented MLP (Master Limited Partnership) is controlled by the strategically linked Andeavor.
There are a few bullish indicators in the chart for Andeavor Logistics.
Bullish Move – Chart Indications
#1 Falling wedge pattern Breakout: As you can see from ANDX’s daily chart, after a continued downtrend, the stock has recently broken out of a falling wedge pattern. This is a clear sign of the reversal of the stock’s earlier bearish bias.
#2 Bullish Flag in weekly chart: This indicates the continuation of the earlier bullish bias.
#3 Close above 200 MA: In the weekly chart, ANDX closed above the 200 day SMA. This also indicates an overall bullishness of the stock.
#4 Supports: The breakout level of $46 is a good support level for ANDX. Once the stock corrects to $46 and surges back again, the 200-day SMA will be below the stock price and will act as a support level.
The stock seems to be ready for a slight correction in the next few days. Here’s why.
- Currently, the stock is near the upper Bollinger band. This is a possible sign of an upcoming price correction.
- Relative Strength Index (RSI) is a momentum oscillator and can be used for identifying if a stock is oversold and overbought. Currently, RSI is nearing 70, indicating that the stock is close to being overbought.
- High volume Doji candlestick shown in daily chart during the uptrend indicates an upcoming reversal.
This correction can be used for entering the trade at the $46 level.
Use Bollinger bands to time the entry of the trade as shown in the figure below. Wait until the stock pulls back and corrects until the middle band of the Bollinger Band. The RSI would be below 70 and moving down once the stock price reaches near the middle band.
Once the stock retests the breakout and surges again, it is the ideal set-up for entering the trade and taking advantage of a potential big move.
If you want to get in on this trade, purchase shares of ANDX on a pullback to $46. Our target price is ultimately a retest of the August highs, so take profits if shares hit $53.50. To limit risk, place a stop loss at $43.90.
Our target potential upside is 16.3% in the next 1-2 months.
For a risk of $2.10, our target reward is $7.50, making this a 1:3 risk-reward trade. In other words, this trade offers 3x more potential upside than downside.
Risks to Consider
The falling wedge breakout pattern may get invalidated and the stock may resume its downtrend. If there is any massive negative news on the Oil and Gas sector, it can trigger a sell-off of the stock. An overall weakness in the market can also cause a price decline of ANDX.
P.S. Please keep in mind that these trade ideas are for information purposes only. We’re not registered financial advisors and these aren’t specific trade recommendations for you as an individual. Each of our readers have different financial situations, risk tolerance, goals, time frames, etc. You should also be aware that some of the trade details (specifically stock prices) are certain to change from the time we conducts our analysis… to the time we publish it… to the time you’re alerted about it. So please don’t attempt to make any of these trades without first doing your own due diligence and research.[hana-code-insert name=’MMPress’ /]