The real estate investment trust that invests in shopping centers, Macerich Co. (NYSE: MAC) seems to be getting ready for a surge in its price as per the latest 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 months. This channel is marked on the chart in purple color. The stock has finally broken out of this channel. This looks like a bullish indication.
Daily Chart – MAC
#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 as a potential buy signal.
#3 Above MAs: The stock is currently trading above both 50-day as well as 200-day SMA. This means that the bulls are currently in control.
#4 Bullish Stoch: The stochastic indicator shows that the %K line is above the %D line in the daily chart, indicating possible bullishness.
#5 Bullish Aroon: The value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
#6 Ascending triangle pattern Breakout: The daily chart shows that the stock had broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in pink color. The breakout level of the ascending triangle pattern generally acts as a good support level.
#7 Breakout from Consolidation Area: The weekly chart shows that the stock has currently broken out of a consolidation area, which is marked as a purple color rectangle. This is a bullish sign.
Weekly Chart – MAC
#8 Bullish ADX and DI: The weekly chart shows that the ADX line has moved up from below the –DI and +DI lines. The +DI line and the ADX line is also currently above –DI line. All these indicate possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for MAC is if the stock closes above the nearest resistance area, which translates to a price of around $13.10.
TP: Our target prices are $16 and $22 in the next 3-5 months.
SL: To limit risk, place a stop loss below $11.30. Note that the stop loss is on a closing basis.
Our target potential upside is 22% to 68% in the next 3-5 months.
For a risk of $1.80, our first target reward is $2.90 and the second target reward is $8.90. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers 2x to 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the channel breakout level with high volume. 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