The global healthcare logistics company headquartered in Richmond, Virginia, Owens & Minor, Inc. (NYSE: OMI) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Consolidation Area Breakout: The daily chart shows that the stock was trading within a consolidation area for the past several months. This is marked in the daily chart in a purple color rectangle. Currently, the stock has broken out of the consolidation area. Once the stock breaks out from a consolidation area, it typically surges higher.
Daily Chart – OMI
#2 Above MAs: The stock is currently trading above its short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA, indicating the overall bullishness of the stock.
#3 MACD above Signal Line: As you can see from the daily chart, the MACD line (blue color) has currently crossed above the MACD signal line (orange color). This indicates a possible bullish bias.
#4 Bullish Stoch: The %K line is currently above the %D line of the stochastic in the daily chart. The stoch is also moving higher from oversold levels. All these usually indicate bullishness.
#5 Bullish ADX: The ADX line and the +DI line is currently above the –DI line. This indicates possible bullishness.
#6 Rounding Bottom Pattern breakout: The weekly charts 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. The stock is also trading above its 50-week as well as 200-week SMA, indicating the strength of the current upmove.
Weekly Chart – OMI
#7 Bullish MACD: In the weekly chart as well, the MACD line is currently above the MACD signal line. This is a possible bullish indication.
#8 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the weekly chart. This indicates possible bullishness.
#9 Bullish ADX: The ADX line has currently moved up from below –DI and +DI lines in the weekly chart. The +DI line is also currently above –DI line. All these indicate possible bullishness.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase the shares of OMI if it trades above the price of around $20.50.
TP: Our target prices are $24 and $28 in the next 3-6 months.
SL: To limit risk, place a stop loss at $18.20. Note that this stop loss is on a closing basis.
Our target potential upside is almost 17% to 37% in the next 3-6 months.
For a risk of $2.30, our target rewards are $3.50 and $7.50. This is almost 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 consolidation area. 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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