Academy Sports and Outdoors Inc. (NASDAQ: ASO) seems to be poised for a price surge as per its latest charts. The company operates as a sporting goods and outdoor recreational products retailer in the United States. The company sells its products under the Academy Sports + Outdoors, Magellan Outdoors, BCG, O’rageous, and Outdoor Gourmet brand names.
Bullish Indications
#1 Channel Breakout: The daily chart shows that the stock has currently broken out of a downtrend channel. This channel is marked in the chart as pink color lines. This is a possible bullish indication.
ASO – Daily Chart
#2 MACD Above Signal Line: In the daily chart, the MACD line (blue color) is currently above the MACD signal line (orange color) which is typically considered a bullish sign.
#3 Bullish Stoch: The %K line (blue color) is above the %D line (orange color) of the stochastic in the daily chart, indicating possible bullishness.
#4 Bullish RSI: In the daily chart, the RSI is currently above 50 and moving higher. This is a possible bullish sign.
#5 Flag Pattern Breakout: The weekly 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 pattern. 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). This is a bullish indication.
ASO – Weekly Chart
#6 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart as well, and is also moving higher from oversold levels. This is a possible bullish indication.
#7 Bullish RSI: In the weekly chart, the RSI is currently moving higher from oversold levels and is currently nearing 50. This indicates the strength of the current upmove and is a possible bullish sign.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of ASO above the price of around $37.00. This is marked as a green color dotted line in the charts above.
TP: Our target prices are $42 and $47 in the next 3-6 months.
SL: To limit risk, place stop-loss at $34.00. Note that the stop-loss is on a closing basis.
Our target potential upside is 14% to 27% in the next 3 to 6 months.
For a risk of $3.00, 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 from the downtrend channel with a 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
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