Quick Update: I will now also be posting on www.insiderintel.com.au, my friend Dele has created a safe and easy to use platform for traders to interact and share ideas. Dele is also posting frequently on there, he has a different trading style to myself, and there is currently no cost to signing up. So it is definitely worth signing up to if you are looking to learn more or are actively trading the markets.
Now to today’s stock post,
Rocket companies (RKT), a finance play on the NYSE is in pretty good shape from a technical perspective. Let’s explore the upsides and the downsides and see if this bad boy is about to go to the moon.
Upsides:
- Breaking out of a big long-term bullish wedge pattern, with a nice big volume base.
- There is a nice volume spike as well. This is a sign that big players may be entering the stock.
- Starting to outperform gold, although there is a bigger breakout line to be broken just above where it is trading vs gold.
- Price isn’t too overstretch from the 30-period moving average on weekly, fortnightly and monthly timeframes.
Downsides:
- Although we have a weekly close, when you zoom into the daily timeframe the breakout is actually only a strong daily candle from last Friday, I would like to wait and see how the next 2 trading sessions go to have confidence that this is a true weekly play and not just a daily fakeout.
- Possible bearish pivot line. The line I have drawn only has two touch points on the line chart, so we don’t know how valid this line is, it looks like a 50/50 to me, so we will have to see if there is a reaction on the smaller timeframes to get a better idea.
- In a sector that has been underperforming. The finance sector hasn’t been looing great relative to the market for a while now, although the Nasdaq finance benchmark is starting to breakout as well, so there is some encouragement about the overall sector.
Overall outlook: From a technical perspective RKT looks quite positive on the chart, it nearly has all the ingredients of a classic Stan Weinstein (author of: Secrets to Profiting from Bull & Bear Markets, a must read) breakout, although the questionable bearish pivot line possible morphing above and the fact it is in a weakish sector does give me some pause for thought. I would also like to see how the next 2 trading sessions play out, to at least get 3-day (more than half a week) confirmation of this breakout, and I want to see if there is any reaction to that silly pivot line before I get really bullish and start talking about rocket ships for Rocket companies.
This is one to definitely keep an eye on.