Chart of the Day: This Outperforming Stock Is Entering Uncharted Waters
As the shares move higher, risks mount for a more sizable pullback.
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Without question the strength in United Rentals URI stock has been impressive. The stock had a tremendous month of September, from the lows at the start of the month, URI ran up 18% on some very strong turnover.
The heavy volume was a sign that big institutions were coming after the stock, buying shares hand over fist. Back in July we exited some shares not far from those old highs and since then have watched URI pull back on two occasions.
But what we like about the chart, below, is the higher lows created by those two pullbacks. Remember, the textbook definition of an uptrend is higher highs and higher lows. Check!
The indicators are also bullish but showing some fatigue. Stochastics (pane 4) are showing strong momentum but at some point the stock will rest and this indicator will fall.
Money flow (pane 5) has been robust throughout the last month or so, while candles in the top pane are blue, which means the trend is strongly bullish based on the GoNoGo composite of indicators. Moving Average Convergence Divergence (MACD) is still on a strong buy signal though, but it is very extended.
URI could pull back modestly to the $750 level and still remain in an uptrend. We believe that sort of pullback would be a great spot to add shares.
We rate URI a Two in TheStreet Pro Portfolio, or stockpile on pullbacks.
More Pro Portfolio:
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- Weekly Roundup: Bucking Trend, September Is Lifting the Portfolio Higher
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At the time of publication, TheStreet pro Portfolio was long URI.
