Pure Storage Among Four Stocks Ready to Breakout
These four stocks have each experienced pullbacks of some degree in their stock price this year and have since undergone periods of consolidation. The recovery process has seen them recapture their 50 day moving averages and taken them back to retest pattern resistance levels. Technical price and money flow indications suggest they are prepared to break out and begin to move higher.
Pure Storage PSTG provides customers with data platforms and optimized advanced software services including cloud storage. The stock formed a double top at the end of last year and then began a dramatic pullback that saw a 40% loss in share value over the next four months. Since that time, it has been making a series of higher lows below horizontal resistance in the $10.70 area, forming a rising a triangle pattern on the daily chart. The relative strength index has moved above its signal average and centerline, and daily moving average convergence/divergence, which is overlaid on a weekly histogram of the oscillator, is tracking above its center line on both timeframes. Accumulation/distribution has crossed above its signal average and Chaikin money flow is entering positive territory. These technical indications reflect positive price momentum supported by positive money flow, and the Bollinger bandwidth reading reflects very tight range compression. The stock has moved above its 50 day moving average and a break above triangle resistance could be followed by a period of high volatility. PSTG is a buy at its current level using a percentage stop under the triangle trend line, and a target price objective in the $12.00 area.
First Data Corporation FTC provides e-commerce mobile payment services to its customers. The stock pulled back off its 52 week high in February breaking a five month uptrend line and its 50 day moving average, before finding support in the $14.80 area. It has since formed a wide horizontal channel between these borders and this week is retesting pattern resistance. Last week moving average convergence/divergence made a bullish crossover and this week it is back above its center line, while the vortex indicator, designed to identify early shifts in trend direction, has also made a bullish crossover. The accumulation/distribution line is above its signal average and the money flow index, a volume-weighted relative strength measure, crossed above its center line. FDC closed near its high on Monday and above resistance, and the stock is a long candidate at its current level using a trailing percentage stop.
PTC Incorporated PTC develops software products and provides technology solutions to its customers. The stock has been a strong uptrend since early 2016 and doubled its share price over the following 52 weeks. In March it saw a small pullback which was followed by a period of horizontal consolidation below the $54.00 area and its 50 day moving average, and in Monday’s session it broke above that resistance and closed near its high. The relative strength index reflects the recent resurgence of positive momentum and the Chandre Trend Meter shows the stock regaining some of the strength of its former trend. Chaikin money flow crossed over its signal average and its center line last month. PTC looks like it is prepared to resume its uptrend and move to new highs. The stock is a buy its current level using an initial percentage stop under the 50 day moving average.
Trinity Industries TRN manufactures and services a variety of freight rail cars to international shippers and railroads. The stock has been consolidating under the $27.50 level for the last two months and, in the process, may have formed a triple bottom above the rising 200 day moving average. During this time moving average convergence/divergence has been tracking in bullish divergence to the stock price and is above its center line, along with the relative strength index. Volume picked up over the last several sessions but Chaikin money flow is still in negative territory. The Chaikin oscillator, an average of the three and ten day Chaikin money flow reading and a faster indication of the direction of money flow, is above its signal average and centerline. The stock is a buy after an upper candle close that penetrates horizontal resistance, using a trailing percentage stop.