The American software company that provides cybersecurity software and services, and part of a Fortune 500, NortonLifeLock Inc. (NASDAQ: NLOK) seems to be gearing up for a surge as per its latest charts.
[Editors note: NortonLifeLock received a double upgrade today from Bank of America.]Bullish Indications
#1 Ascending triangle pattern Breakout: The stock’s daily chart shows that it had recently 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. A breakout from an ascending triangle pattern generally indicates the start of a bullish trend.
Daily Chart – NLOK
#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.
#3 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.
#4 Bullish ADX and DI: The ADX line has currently started to move up from below –DI and +DI lines in the daily chart. The +DI and ADX lines are also currently above –DI line. This indicates possible bullishness.
#5 Bullish Stoch: The %K line (blue color) of stochastic is above the %D line (orange color), indicating possible bullishness.
#6 Price Above MAs: The stock is currently trading above the 50-week as well as 200-week SMA, indicating bullishness. However, there is a near-term resistance level at around $24.00 (marked as a purple color dotted line), above which the stock could surge higher.
Weekly Chart – NLOK
#7 Bullish Aroon: The weekly chart shows that the value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30. This indicates bullishness.
#8 Bullish ADX and DI: In the weekly chart as well, the +DI line and the ADX line are above the -DI line, indicating possible bullishness.
#9 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart as well. This is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of NLOK above the near-term resistance area of around $24.00.
TP: Our target prices are $29 and $35 in the next 3-6 months.
SL: To limit risk, place a stop loss near $21.05. Note that this stop loss is on a closing basis.
Our target potential upside is 21% to 46% in the next 3-6 months.
For a risk of $2.95, the target rewards are $5.00 and $11.00. 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 ascending triangle pattern breakout level. 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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