SpartanNash Company (NASDAQ: SPTN) seems to be poised for a price surge as per its latest charts. SpartanNash is an American food distributor and grocery store retailer headquartered in Byron Center, Michigan. The company’s core businesses include distributing food to independent grocers, military commissaries, and corporate-owned retail stores in 44 states, Europe, Latin America, and the Middle East.
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).
SPTN – Daily Chart
#2 Price above MAs: The price is currently above the short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA, indicating that the bulls are in control. This is a positive indication.
#3 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.
#4 Bullish ADX: The ADX indicator shows that the +DI line is currently above the –DI line and the ADX line has moved up from below –DI and +DI lines. This indicates possible bullishness.
#5 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.
#6 Uptrend Channel breakout: As you can see from the weekly chart, the stock has been trading within an uptrend channel during the past several months. This is marked in the chart in pink color lines. The stock has currently broken out of this channel and is moving higher. Once a stock breaks out from a channel, it has the potential to move further up. The stock is also trading above its 50-week and 200-week SMA, indicating that the bulls are firmly in control.
SPTN – Weekly Chart
#7 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart. This is a possible bullish indication.
#8 Bullish MACD: The MACD line is above the MACD signal line in the weekly chart as well, indicating bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase the shares of SPTN above the price of around $35.20.
TP: Our target prices are $40 and $45 in the next 1-5 months.
SL: To limit risk, place stop-loss at $32.50. Note that the stop-loss is on a closing basis.
Our target potential upside is 14% to 28% in the next 1 to 5 months.
For a risk of $2.70, our target rewards are $4.80 and $9.80. 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 from the flag pattern 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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