Popular packaging company known for its brands: Cryovac food packaging, Bubble Wrap cushioning, and Diversey cleaning and hygiene, Sealed Air Corp (NYSE: SEE) seems to be poised for a price surge as per its latest charts.
#1 Double Bottom: The daily chart of SEE shows that a double bottom is being formed for the stock. This is marked in the chart below in purple color. A Double bottom pattern is a bullish reversal pattern, indicating that the stock could possibly move upwards.
#2 RSI Moving Up: In the daily chart, the RSI was near oversold levels and is now moving upwards. This indicates a possible upmove in the near-term.
[hana-code-insert name=’adsense-article’ /]#3 Long-Term Support nearby: The daily chart of Sealed Air Corp shows that the stock is currently near a long-term support level.
This is marked as a green dotted line.
This seems like a good support level, as the stock has historically bounced back from this level.
#4 Pennant Pattern: As seen from the weekly chart below, the stock was in a strong uptrend from July 2012 to August 2015.
Then the stock started consolidating and was in a narrowing range.
This is a classic pennant pattern and is marked in the chart below in blue color. Currently, the stock is trading near the lower end of the pennant. A pennant is a continuation pattern. Whenever a stock breaks out of the pennant pattern, it typically continues its previous trend (uptrend in this case).
#5 Unbroken Uptrend in Weekly Chart: As evident from the weekly chart, the stock is in an uptrend as it has been making higher highs and higher lows for the past several years. The ADX is also near 30, indicating that the overall uptrend is still strong.
#6 Oversold RSI: The RSI in the weekly chart was near the oversold level and is currently moving up, further indicating the price may reverse to the upside.
#7 Fibonacci Bounceback: As shown in the weekly chart, the stock had bounced back from the 61.8% Fibonacci support level multiple times. This level seems like a good support level for the stock.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase shares of SEE at the current price level of $42.10.
TP: Our target prices are $50 and $55 in the next 4-6 months.
SL: To limit risk, place stop-loss at $38.50. Note that stop loss is on a closing basis.
Our target potential upside is 19% to 31% in the next 4-6 months. For a risk of $3.60, our target rewards are $7.90 and $12.90. This is a 1:2 and 1:4 risk-reward trade. In other words, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the double bottom pattern with a high volume. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Tara[hana-code-insert name=’investorplace-article2′ /]