The well-known real estate investment trust company headquartered in Scottsdale, Arizona, Store Capital Corp (NYSE: STOR) seems to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 MA crossover: As you can see from the daily chart of STOR below, the short-term moving average of 50-day SMA has crossed above the longer-term moving average of 200-day SMA. Such crossovers indicate a possible upcoming bullish movement. The stock is also currently trading above both its 50-day and 200-day SMA, which implies that the bulls are currently in control.
Daily Chart – STOR
#2 IH&S Pattern Breakout: From the daily chart, you can see that the stock had recently broken out of an Inverted Head and Shoulders (IH&S) pattern. This IH&S pattern is marked in the chart in orange color. The stock had then retested the breakout level and is now moving upwards. This is a possible sign of an upcoming price surge.
[hana-code-insert name=’adsense-article’ /] #3 Bullish Stochastic: The %K (blue) line of stochastic has crossed over the %D (Orange) line.This cross is a possible bullish indication.
#4 Strong Trend as Per ADX: The value of ADX is near 35, indicating strong trend.
The ADX and +DI lines are also above the –DI line, indicating bullishness.
#5 Other Bullish Indications: 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 possible bullish signal.
The RSI is also above 50, indicating strength.
#6 Downtrend Broken: The weekly chart shows that the stock was in a downtrend during the past year. Currently, the stock has broken out of the downtrend and have started a new uptrend. This is a bullish sign.
Weekly Chart – STOR
#7 Bullish Stochastic: The %K (blue) line of stochastic has crossed over the %D (Orange) line in the weekly chart as well, indicating bullishness.
#8 Alligator Awake: William’s Alligator has currently woken up in an upward direction (green line above the red line and blue line) and candles have formed above the three lines. This indicates a possible bullish bias.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can buy STOR at the current price of $26.78.
TP: Our target prices are $32 and $40 based on the breakout from the IH&S pattern.
SL: To limit risk, place a stop loss near $24.80. Note that this stop loss is on a closing basis.
Our target potential upside is 19% to 49% in the next 3-6 months. For a risk of $1.98, the target rewards are $5.22 and $13.22. This is a nearly 1:3 and 1:7 risk-reward trade.
In other words, this trade offers nearly 3X to 7X more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the IH&S pattern breakout level. 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
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