The real estate investment trust company based in Boston, Massachusetts, Stag Industrial Inc. (NYSE: STAG) seem to be poised for a price surge as per its latest charts.
#1 Falling Wedge Pattern Breakout: As you can see from the daily chart, STAG has been trading within a falling wedge pattern during the past few months. This is marked in the daily chart in pink color lines. A Falling Wedge Pattern is a bullish pattern. Once the stock breaks out from it, it has the potential to move further up. Currently, the stock has broken out of the falling wedge pattern, indicating bullishness.
#2 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the signal line (orange color). This is a possible bullish setup.[hana-code-insert name=’adsense-article’ /]#3 Above MA: The stock is currently trading above both its 50-day as well as 200-day SMA.
This implies that the bulls are currently in control.
These MAs also acts as a good support level.
#4 Symmetrical Triangle Pattern Breakout: The daily charts also shows that a symmetrical triangle pattern breakout has occurred.
This is marked in purple color lines.
A symmetrical triangle pattern represents a period of consolidation before the price breaks out. This is typically formed when there is an indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper trend line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern. This is a bullish sign.
#5 Other Bullish Indicators: The RSI shows bullishness, as it is currently above 50. The %K line is above %D in the stochastic. All these are possible bullish signs.
#6 Ascending Triangle Pattern: As evident from the weekly chart, the stock is currently forming an ascending triangle pattern. This is marked in the chart in pink color lines. Once the stock breaks out from this pattern, it has the potential to move further up.
#7 Oversold RSI: The RSI is moving up after reaching oversold levels. This is a bullish sign.
#8 Bullish Stochastic: The weekly chart shows that the %K line is above the %D line in the stochastic. This indicates that an upmove may be imminent.
#9 Cup and Handle Pattern: The weekly chart of STAG shows that the stock formed a cup and handle pattern. This is marked in the chart in orange color. A cup and handle pattern is a consolidation and breakout pattern and a breakout from it indicates that the stock may move higher in the short term.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of STAG between the prices of $26 to $27.
TP: Our target prices are $32 and $40 in the next 3-5 months.
SL: To limit risk, place stop-loss at $24.10. Note that the stop loss is on a closing basis.
Our target potential upside is 18% to 54% in the next 3-5 months.
- Entry at $26: For a risk of $1.90, our target rewards are $6.00 and $14.00. This is an almost 1:3 and 1:7 risk-reward trade.
- Entry at $27: For a risk of $2.90, our target rewards are $5.00 and $13.00. This is an almost 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 7x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the falling wedge 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.
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