Chart of the Day: A Holding Breaks Out of a Flat Base
A breakout from a sideways move is usually very bullish.
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Last we checked on United Rentals URI the stock was in the middle of building a flat base. As we see in the top pane of the chart below, that period lasted for about six weeks, then a sudden burst of volume lifted the stock above that base. We now have a small series of higher highs, higher lows — the textbook definition of an uptrend.
We like this move and believe it will ultimately lead to new highs around the $896 level. Once the bullish momentum takes hold of this stock it continues to go, but of course it cuts both ways. For now, the setup is very bullish as the indicators are pointing towards higher prices ahead.
The MACD (moving average convergence/divergence) has been on a buy signal since the breakout. Momentum is strong and now the stochastics look embedded, which means dip buyers are actively pursuing United Rentals. Money flow remains bullish too, telling us big institutional money is coming after the stock.
There's plenty to like here as a new high is about 13% away from current levels. With earnings just around the corner, that could be the catalyst to get this stock higher.
We like United Rentals in TheStreet Pro Portfolio and rate it a One, or "buy at anytime."
At the time of publication, TheStreet Pro Portfolio was long URI.
