The company based in the United States, known to be the largest recreational boat and yacht retailer in the nation, MarineMax Inc. (NYSE: HZO) seems to be getting ready for a price bump according to the charts.
Bullish Move – Chart Indications
#1 Channel Breakout: As you can see from the daily chart, the stock was trading within a channel for the past several weeks. This is shown in purple color. HZO had typically taken support at the lower rail of the channel before bouncing back. The stock has currently broken out of the channel, which is a possible bullish sign.
Daily Chart – HZO
#2 Trading Above MAs: The stock is currently trading above its 50-day as well as 200-day SMA, which implies that the bulls are currently in control.
[hana-code-insert name=’adsense-article’ /]#3 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.
#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 ADX and DI: The ADX indicator shows bullishness in the daily chart because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX has started rising from below both (+DI) and (-DI).
#6 Fibonacci Support: Usually, after an up-move, stocks typically retraces to any of the key Fibonacci levels before surging back again. HZO had taken support at the 50% Fibonacci support level multiple times, as seen in the weekly chart. So, this seems like a strong support area for the stock.
Weekly Chart – HZO
#7 Bullish Stoch: The weekly chart shows that the %K line is presently about to move above the %D line in stochastic. This is a possible bullish sign.
#8 Bullish MACD: The MACD line is above the signal line in the weekly chart as well, indicating a possible bullish bias.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase half the intended quantity of shares of HZO at the current price of $18.16. The rest can be purchased if the stock corrects to the price of around $16.80.
TP: Our target prices are $25 and $30 in the next 3-6 months.
SL: To limit risk, place a stop loss below $13.90 (for entry near $16.80) and $15.40 (for entry near $18.16). Note that the stop loss is on a closing basis.
Our target potential upside is nearly 38% to 79% in the next 3-6 months.
- Entry near $16.80: For a risk of $2.90, our target rewards are $8.20 and $13.20. This is a 1:3 and 1:5 risk-reward trade.
- Entry near $18.16: For a risk of $2.76, our target rewards are $6.84 and $11.84. This is a 1:3 and 1:4 risk-reward trade.
In other words, this trade offers almost 3x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the downtrend channel and goes below it. 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.
Happy trading!
Tara
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