The company that designs, manufactures, and distributes uniforms to retailers, foodservice chains, transportation, and other service industries, Superior Group of Companies Inc. (NASDAQ: SGC) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Channel Breakout: The daily chart shows that the stock was trading within a trend channel for the past few months. This channel is marked in the daily chart in orange color. Currently, the stock has broken out of this channel, indicating that it has the potential to surge ahead.
Daily Chart – SGC
#2 MACD above Signal Line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color). This indicates a possible bullish bias.
#3 Above MAs: The stock is currently trading above both 50-day and 200-day SMA, indicating the overall bullishness of the stock.
#4 Bullish ADX and DI: The ADX indicator shows bullishness because (+DI) is greater than (-DI), ADX and (+DI) are above (-DI), and ADX is rising from below both (+DI) and (-DI).
#5 Strong Stoch: The stochastic is currently moving up and the %K line is currently above the %D line.
This usually indicates bullishness.
#6 Downtrend Broken: The weekly chart shows that the stock has currently broken out of a short-term downtrend. This downtrend line is marked in purple color line in the chart. The stock is also trading above its 50-week SMA. All these indicate possible bullishness.
Weekly Chart – SGC
#7 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 is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, the ideal buy level for SGC is at around $12.50 – $13.00. However, for those with a higher risk appetite, you can purchase half the intended quantity of shares of SGC if it trades above the previous high. This translates to a price of around $14.60.
TP: Our target prices are $17 and $21 in the next 3-6 months.
SL: To limit risk, place a stop loss at $9.90 (for entry near $12.80) and $13.00 (for entry near 14.60). Note that this stop loss is on a closing basis.
Our target potential upside is almost 16% to 64% in the next 3-6 months.
- Entry near $12.80: For a risk of $2.90, our target rewards are $4.20 and $8.20. This is almost 1:2 and 1:3 risk-reward trade.
- Entry near $14.60: For a risk of $1.60, our target rewards are $2.40 and $6.40. This is almost 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x rewards when compared to risks.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the channel. 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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