Lumber Companies Are Standing Tall

 | Jan 25, 2018 | 8:44 AM EST
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I have not covered the listed lumber companies for some time now. Over the many months since October 2016 the industry has turned around, with the stock prices of names like Louisiana Pacific Corp. (LPX)  , Weyerhaeuser Co. (WY) and Deltic Timber (DEL) bottoming in the fourth quarter of 2016.

Louisiana Pacific Corp. and other companies broke out to new highs on Wednesday. Time for a fresh look at the charts and indicators.

In this daily bar chart of LPX, below, we can see an uptrend -- higher lows and higher highs -- the past 12 months. Prices climbed sharply yesterday to a new closing high.

Prices are positioned above the rising 50-day moving average line and the rising 200-day line. Dips towards the 200-day line have been buying opportunities in early June, late August and late December.

The daily On-Balance-Volume (OBV) line has been rising since August, and tells us that buyers of LPX have been more aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator turned back above the zero line in early January for a fresh outright go long signal.

In this weekly bar chart going back three years, below, we can see that prices have doubled from their 2015 lows. Prices are above the rising 40-week moving average line.

The weekly OBV line has not always presented a bullish picture. The weekly MACD oscillator has been above the zero line since early 2016 and just turned up for a fresh go long signal.

In this long-term weekly Point and Figure chart of LPX, below, we can see breakouts at $23 and $27. Prices have reached the $30.50 price target, but further gains are anticipated.

Bottom line -- LPX has broken out to new highs and if you are not long I would look to buy LPX on a one or two day dip. Risk a close below $26 and look for $36 and then $54 as long-term price targets.

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