The American corporation specializing in a variety of pre-clinical and clinical laboratory services for the pharmaceutical, medical device, and biotechnology industries, Charles River Laboratories Intl. Inc. (NYSE: CRL) seems to be ready for an upmove in the near term as per its latest charts.
#1 Channel Support: As you can see from the daily chart of CRL below, the stock has been trading inside an uptrend channel for the past few weeks. This is marked in the daily chart in purple color. Currently, the stock has taken support at the lower end of the channel.
#2 RSI Moving up: The daily chart shows that the RSI has taken support near 40 and started moving upwards. This is a bullish sign.
#4 Bollinger Squeeze: The daily chart of the stock shows a Bollinger Band squeeze.
A Bollinger band squeeze foreshadows an upcoming explosive move.
The stock seems to be in a consolidation phase, wherein the range is getting narrower.
All this points to a possible upmove.
#5 Bullish Candlestick Patterns: There is currently a piercing line candlestick pattern being formed in the daily chart. This is marked as a pink ellipse. This pattern usually signals the end of a small to moderate downward trend. The latest candle is also a bullish marubozu candle, wherein open price is almost same as low price and close price is almost same as high price. This is also a bullish sign.
#6 Flag Pattern: The weekly chart shows that the stock has been forming a flag pattern. The stock was in a strong uptrend for the past several months. Then the stock started consolidating and was in a narrow range. This is a classic flag pattern, which is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend which is an uptrend in this case.
#7 %R near Oversold: The William’s %R indicator is currently near -80 which is oversold levels. This points to a possible reversal to upside in the near term.
#8 Other Indicators: The CCI is currently above -100 and moving up. The RSI is near 50 and moving up. All these indicate possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of CRL at the current price of $104.63
TP: Our target prices are $115 and $125.
SL: To limit risk, place a stop loss at $102.40. Note that this stop loss is on a closing basis.
Our target potential upside is 10% to 41% in the next 4-6 months. For a risk of $2.23, our target rewards are $10.37 and $20.37.
In other words, this trade offers nearly 5x to 9x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the channel support. 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 its sector.