U.S. Concrete Is Showing a Strong Base and Pending Breakout

 | Mar 14, 2017 | 9:29 AM EDT
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Investing in U.S. Concrete (USCR) may not be a great conversation starter at a cocktail party but it has made a big base pattern in recent months, which can support a strong rally to around $94, as we read the charts.

Interested in a solid return or a sexy story? Let's take a look.

In this daily chart of USCR, below, you may be able to make out an inverse head and shoulders pattern. There is a left shoulder in June, a head in early October and a complex right shoulder in January/February. There is a neckline across $70. See it now?

Normally a pattern like this is a bottom formation, but it can sometimes be a continuation pattern. Currently USCR is ready to break out on the upside. Prices are above the flat-to-slightly-rising 50-day average line, as well as the flat-to-rising 200-day line.

The On-Balance-Volume (OBV) line has roughly improved from the bottom of the head in October and the overall pace of volume has been heavier since August. The trend-following Moving Average Convergence Divergence (MACD) oscillator moved above the zero line in November and is currently pointed up -- bullish.

In this three-year weekly chart of USCR, above, we can see the long-term strength in the stock -- as well as the repeated attempts to break above $70. Prices are above the rising 40-week moving average line, and there were a couple of successful tests of that line in recent months. The weekly OBV line is positive, and looks like it is leading the price action higher. The MACD oscillator on this timeframe is bullish.

This Point and Figure chart, above, shows the price action in USCR in a different light. A trade at $71 will be a so-called double top breakout and give us a "count," or price target, of around $94. Not bad for a cement company, eh?

Bottom line: Traders could go long USCR on a close above $71, risking below $64 for now. Look for the $95 area in the months ahead as a place to take potential profits.

Columnist Conversations

we like this chart here, it appears ready to move higher. BOUGHT BZUN OCT 35 CALL AT 3.40
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