The pet medication and wellness company that operates in two segments, Products, and Services, PetIQ Inc. (NASDAQ: PETQ) seems to be ready for a surge as per its latest charts.
Bullish Indications
#1 Ascending Triangle Pattern Breakout: The daily chart shows that the stock had recently broken out of an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern and is marked on the daily chart in purple color. This is a possible bullish sign.
Daily Chart – PETQ
#2 Trading Above MAs: The stock is currently trading above both its short-term moving average of 50-day and the long-term moving average of 200-day SMA, which implies that the bulls are currently in control. This is a possible bullish sign.
#3 Bullish ADX and DI: The ADX line has currently started to move up from below –DI and +DI lines. The +DI line and the ADX line are also above –DI line. These indicate possible bullishness.
#4 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.
#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 Breakout From Resistance Area: The weekly chart shows that the stock has broken out of a resistance level, which is marked as a pink color dotted line. This resistance area would now act as a support area. The stock is also trading above its 50-week SMA. All these are possible bullish signs.
Weekly Chart – PETQ
#7 MACD Above Signal Line: In the weekly chart as well, the MACD line (light blue color) is currently above the MACD signal line (orange color). This is typically considered a bullish signal.
#8 Bullish Stoch: The %K line of the stochastic is currently above the %D line in the weekly chart, indicating bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for PETQ is if CLOSES above the price of $40.00. Note that the stock’s daily close should be above $40 for entering into this trade.
TP: Our target prices are $50 and $60 based on the breakout from the Ascending Triangle pattern.
SL: To limit risk, place a stop loss near $33.80. Note that this stop loss is on a closing basis.
Our target potential upside is 25% to 50% in the next 3-5 months.
For a risk of $6.20, the target rewards are $10.00 and $20.00. 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 with high volume from the ascending triangle pattern. 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