The biggest driver behind this trade is the bullish crossover by the stochastic indicators. The last three times there was a similar setup, shares rallied over 40% each time.
It has excellent fundamentals, has been in a positive trend channel for the last seven months, and looks ready to run higher.
Its pattern is about as clean as I’ve seen.
The underlying stock has good fundamentals and has bounced off the lower rail of a trend channel that has formed over the last four months.
In a downwardly sloped trend channel, the stock just hit the upper rail and both the RSI and the stochastic indicators turned lower last week.
The stochastic indicators made a bullish crossover last night which should help it make its next move higher.
It’s my “Option Trade of the Day”.
Yesterday, the stochastic indicators performed a bearish crossover and the RSI dropped out of overbought territory. The last few times we have seen this setup, the stock dropped in the weeks that followed.
It just hit the lower rail of its trend channel and looks primed for its next move higher.
The underlying stock has been trending higher for quite some time now and in similar setups in late January and early March, when it jumped rather sharply in the ensuing weeks.