The online pet pharmacy based in the United States that sells prescription and non-prescription pet medication, Petmed Express Inc. (NASDAQ: PETS) seems to be poised for a price surge according to its charts.
Bullish Indications
#1 Flag Pattern Breakout: The daily chart shows that the stock was in an uptrend after which it started consolidating and was in a narrow range. This is a classic flag pattern and is marked in the chart in purple color. Currently, the stock has broken out of the flag. A Flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case).
Daily Chart – PETS
#2 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.
#3 Trading Above MAs: The stock is currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control.
#4 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.
#5 Bullish Stoch: The %K line of the stochastic is above the %D line in the daily chart, which is a possible bullish indication.
#6 Rounding Bottom Pattern: The weekly chart shows that the stock has broken out of a rounding bottom pattern. This pattern is marked in pink color. A breakout from a bullish pattern like rounding bottom indicates that the trend may soon have a bullish bias.
Weekly Chart – PETS
#7 Bullish MACD: In the weekly chart as well, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal entry level for PETS is if it crosses the price of around $45.
But for those with a higher risk appetite, you can purchase half the intended quantity of shares of PETS if it trades above yesterday’s close, at a price of around $42.
TP: Our target prices are $50 and $55 in the next 4-6 months.
SL: To limit risk, place a stop loss at $41.70 (for entry near $45) and $36.90 (for entry near $42). Note that this stop loss is on a closing basis.
Our target potential upside is almost 11% to 31% in the next 4-6 months.
- Entry near $42: For a risk of $5.10, our target rewards are $8.00 and $13.00. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry near $45: For a risk of $3.30, our target rewards are $5.00 and $10.00. This is a nearly 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 with high volume from the flag 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 the sector.
Happy Trading!
— Tara
This is the #1 Stock to Buy for the AI Tidal Wave [sponsor]Marc Chaikin warned people about NVDA before its 2023 bull run - now he's naming his next pick or the AI tidal wave. Learn more here.