The company that provides alternative investment management services and institutional research services, as well as management of its investment portfolio, Associated Capital Group Inc. (NYSE: AC) seem to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has currently broken out of a Symmetrical Triangle pattern. This is a continuation pattern and is characterized by two converging trend lines connecting a series of sequential peaks and troughs. This pattern is marked on the daily chart as pink color dotted lines. A breakout from a symmetrical triangle pattern usually signifies the start of a bullish move.
Daily Chart – AC
#2 Price above MAs: The price is currently above both the short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA. This usually implies a possible bullish bias for the stock.
[hana-code-insert name=’adsense-article’ /]#3 MACD above Signal Line: The daily chart shows that the MACD line (blue color) is currently above the MACD signal line (orange color).
This is a possible bullish setup.
#4 Channel Breakout: The daily chart shows that the stock had formed a trend channel in the last few months.
This is marked as orange color lines.
Currently, the stock has broken out from the upper rail of this trend channel.
Once the stock breaks out of a channel, it usually moves higher.
#5 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), and ADX is starting to move up from below (-DI) and (+DI).
#6 %K above %D: The %K line of the stochastic is currently above the %D line in the daily chart, indicating possible bullishness.
#7 Fibonacci Support: Usually, after an up-move, stocks retraces to any of the key Fibonacci levels before surging back again. AC had taken support at the 50% Fibonacci support level of the upmove, as seen in the weekly chart. This is a possible bullish sign.
Weekly Chart – AC
#8 MACD above Signal Line: The MACD line (blue color) is currently above the signal line (orange color) in the weekly chart as well, indicating a bullish bias.
#9 %K above %D: The %K line of the stochastic is currently above the %D line in the weekly chart too, indicating possible bullishness.
#10 Bullish RSI: The RSI is above 50 and moving up, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can buy the shares of AC at the current price of $38.57.
TP: Our target prices are $45 and $55 in the next 3-6 months.
SL: To limit risk, place a stop loss at $34.40. Note that this stop loss is on a closing basis.
Our target potential upside is nearly 17% to 43% in the next 3-6 months.
For a risk of $4.17, the target rewards are $6.43 and $16.43. 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 pattern. 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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