Looking for Higher Highs After a Trex Correction

Jim Cramer told viewers of his Mad Money program Thursday night that people are fleeing the cities to avoid Covid and to remodel their homes for remote working and schooling. That means stocks like Home Depot (HD) , Lowe's (LOW) , Sherwin-Williams (SHW) and Trex Co. (TREX) are all still buys.

Let's check out the charts of TREX. We looked at TREX briefly back on October 22 and wrote that "The indicators for AZEK and TREX suggest weakness ahead. Maybe it is time to take the outdoor furniture in for the season." TREX did decline into early November but has since climbed to new highs.     

In this daily bar chart of TREX, below, we can see a strong rally from the March low. Prices have tripled. TREX is trading above the rising 50-day moving average line and the bullish 200-day moving average line.

The On-Balance-Volume (OBV) line has been steady since July but now looks like it is edging quietly higher telling us that buyers of TREX are being more aggressive.

The Moving Average Convergence Divergence (MACD) oscillator is bullish.   

In this weekly bar chart of TREX, below, we can see basing action around the $35 level from 2018 to early 2020. This base can probably support still further gains. The slope of the 40-week moving average line is positive.

The OBV line has been improving since late November and the MACD oscillator turned upwards to a fresh outright go long signal. 

In this daily Point and Figure chart of TREX, below, we can see that prices have exceeded their $82 price target. 

In this weekly Point and Figure chart of TREX, below, we can see a potential price target in the $115 area.  

Bottom line strategy: TREX may correct down to the $85 area if weakness from the broad market has its way. Some new accumulation (buying) around the $85 area should set the stage for further gains to the $115 area.

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