Rocket Lab's Target Price Is Flying Higher

What a month for core Sarge-folio holding and core "Stocks Under $10" name Rocket Lab  (RKLB) . I don't think I have ever had to cover one stock four times in one calendar month, but that's about to change. Back on Dec. 3, I wrote to the "Stocks Under $10" crowd, stating that "I am not running for the hills," but that I did see the potential for a still incomplete Head & Shoulders pattern to fully develop. That would have been a bearish signal for those new to technical analysis.

A few days later, I wrote again: I stated that no, we were "not out of the woods" but that the stock was moving upward toward its 50-day simple moving average and that would essentially break the bearish pattern that had been under development. I reinstated my $65 target price with the stock trading at $51.80.

Just days after that on Dec. 11, writing for Doug Kass' Daily Diary here at TheStreet Pro, with the shares trading at $62.80, I noted the 50-day line had been retaken, and that the Head & Shoulders pattern was broken. I also mentioned to readers that "Should my $65 target end up being pierced, I will take a token profit, and I am likely to assign a new target price to the stock using the October high as my pivot."

Well, lucky me, I had no internet for part of last week and had to take my Florida office apart (again) and move it somewhere else in the area, where I combined it with my Long Island office. I was unable to trade or even work on my portfolios for days. This morning, RKLB is trading with a $73 handle after closing at $70.52 on Friday. RKLB was up more than 17% on Friday and at this morning's last sale is up 95.6% over the past month. Yowza! We now have a much more bullish technical pattern to look at, which I'll get to in a minute.

News

On Friday, Rocket Lab USA (the former name of the firm), which is now a wholly owned subsidiary of Rocket Lab was awarded a prime contract by the U.S. Space Force Development Agency to design and manufacture 18 satellites for the tracking layer Tranche 3 program under the Proliferated Warfighter Space Architecture.

The contract is worth $816 million and will have Rocket Lab delivering satellites equipped with advanced missile warnings, tracking and defense sensors. This will provide global, persistent detection and tracking of emerging missile threats. Yes, this does include the detection of hypersonic weapons systems. I'm so fired up; I have to play my favorite KISS song:

War Machine

Take the reins of power and seize them

Draw the battle lines

Armageddon's just a matter of time

Tear down the voice of reason

Let the arrows fly

Your freedom's just a state of mind

Better watch out, cause I'm a war machine

You better watch out, cause I'm a war machine

- Simmons, Adams, Vallance (KISS) 1982

This was my infantry school song (in my head) when I was stationed at Camp Lejeune after boot camp at Parris Island. Call me immature if you want. I was 17. What were you doing at 17?

The Charts​

Here is a parting shot at the now-shattered Head & Shoulders pattern. See ya! Now let's take a look at what we now see. No, the pivot is not going to be the October high...

​​Now, I see a Cup with Handle pattern (which is bullish) with a $65 (our old target) pivot. Readers will see a reading for Relative Strength that is starting to scrape up against a technically overbought reading. The stock is also close to experiencing a swing traders' or mini-golden cross. That's where the 21-day exponential moving average crosses above the 50-day simple moving average and is in my book, a bullish development.

Below the chart, readers will note a daily moving average convergence divergence that is firing on all bullish cylinders. 

The histogram of the 9-day exponential moving average is now well above zero and rising. In addition to 12-day EMA and 26-day EMA are both also above zero, both also rising and with the 12-day line running adobe the 26-day line. We have no choice but to increase our target price.

My Strategy

Target Price: $81

Pivot: $65

Add: down to 50-day SMA (currently $54.90)

Panic: loss of 200-day SMA (currently $39.50)

At the time of publication, Guilfoyle was long RKLB equity.