The American manufacturer of recreational vehicles that sell towable and motorized RVs through its subsidiaries brands including Airstream, Heartland RV, Jayco, Livin Lite RV, and others, Thor Industries, Inc. (NYSE: THO) seems to be ready for a price surge in the near-term.
Bullish Indications
#1 Channel Breakout: The daily chart of THO shows that the stock was trading within a downtrend channel for the past few months. This channel is marked on the daily chart in pink color. Currently, the stock has broken out of the channel with high volume, after taking support at the bottom of the channel multiple times. This seems like a possible bullish indication.
Daily Chart – THO
#2 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has started rising from below both (+DI) and (-DI). These point to a possible upmove in the near-term.
[hana-code-insert name=’adsense-article’ /]#3 Above MA: The stock is currently trading above its 50-day SMA, indicating that the bulls are currently in control.
#4 MACD above Signal Line: The MACD (light blue color) is currently above the MACD signal line (orange color) in the daily chart.
This typically indicates a bullish setup.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart.
This indicates possible bullishness.
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of a short-term downtrend. The downtrend line is marked in pink color. This is a possible bullish sign.
Weekly Chart – THO
#7 Bullish Stochastic: The %K line is currently above the %D line in the stochastic. This indicates possible bullishness.
#8 RSI Strong: Relative strength index (RSI) is currently above 50 after moving up from oversold levels in the weekly chart. This indicates the strength of the current upmove.
#9 MACD above Signal Line: In the weekly chart as well, the MACD line (light blue color) is currently above the MACD signal line (orange color) which is typically considered as a potential buy signal.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can the shares of THO if it crosses above the resistance level of $60.00.
TP: Our target prices are $70 and $80 in the next 3-6 months.
SL: To limit risk, place a stop loss at $53.90. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 17% to 33% in the next 3-6 months.
For a risk of $6.10, our first target reward is $10.00 and the second target reward is $20.00. This is a 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the channel 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 new government rules or regulatory changes in its sector.
Happy Trading!
Tara
[hana-code-insert name=’MMPress’ /]