The company that manufactures fiberglass motorized boats distributed and marketed through its independent dealer network, Marine Products Corp. (NYSE: MPX) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Symmetrical triangle pattern Breakout: MPX’s daily chart shows that the stock has currently broken out of a Symmetrical Triangle pattern. This is a possible bullish sign. A symmetrical triangle is a continuation pattern and is characterized by two converging trendlines connecting a series of sequential peaks and troughs. This is marked on the daily chart as purple lines.
Daily Chart – MPX
#2 Trading Above MA: The stock is currently trading above its 50-day SMA, which implies that the bulls are currently in control.
[hana-code-insert name=’adsense-article’ /]#3 MACD Above Signal Line: In the daily chart, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered bullish.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX is moving up from below (-DI) and (+DI).
#5 Bullish Stochastic: As you can see from the daily chart, the %K line (blue color) is currently above the %D line (orange color), indicating a bullish bias.
#6 Fibonacci Support: Usually, after an up-move, stocks typically retraces to any of the key Fibonacci levels before surging back again. MPX had taken support at the 38.2% Fibonacci support level as seen in the weekly chart before surging higher. This seems like a possible bullish sign. The stock is also trading near a strong support area. This seems like a good area to move higher.
Weekly Chart – MPX
#7 MACD above Signal Line: In the weekly chart, the MACD line (blue color) has crossed above the MACD signal line (orange color) which is a bullish signal.
#8 Bullish Stochastic: In the weekly chart as well, the %K line (blue color) is currently above the %D line (orange color), indicating a bullish bias.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of MPX at the current price of $15.77.
TP: Our target prices are $20 and $25 based on the breakout from the Symmetrical Triangle pattern.
SL: To limit risk, place a stop loss near $13.60. Note that this stop loss is on a closing basis.
Our target potential upside is 27% to 58% in the next 3-6 months. For a risk of $2.17, the target rewards are $4.23 and $9.23. This is a nearly 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 with high volume from the symmetrical triangle breakout level. 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.
Happy Trading!
Tara
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