Oak Street Health Inc. (NYSE: OSH) seems to be poised for a price surge as per its latest charts. The company offers healthcare services to patients in the United States. The company operates primary care centers for Medicare beneficiaries.
Bullish Indications
#1 Double Bottom Pattern: As you can see from the daily chart below, the stock has been forming a double bottom pattern. This is marked in purple color. A double bottom pattern is a bullish reversal pattern, and a breakout from it would indicate that the stock could move higher. The stock currently looks poised for a breakout from the double bottom pattern.
OSH – 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 currently 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 started to move 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 Channel Breakout: As you can see from the weekly chart, the stock was trading within a downtrend channel during the past few months. This is marked in the chart in pink color. Currently, the stock has broken out of the downtrend channel with high volume. A breakout from the channel usually indicates that the stock would move higher.
OSH – 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 shares of OSH above the price of around $27.90.
TP: Our target prices are $34 and $38 in the next 3-6 months.
SL: To limit risk, place stop-loss at $24.50. Note that the stop-loss is on a closing basis.
Our target potential upside is 22% to 36% in the next 3 to 6 months.
For a risk of $3.40, our target rewards are $6.10 and $10.10. 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 trend 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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