United States Cellular Corp. (USM) was upgraded yesterday to a Buy by TheStreet's Quant Ratings service. Naturally I was curious how the charts and indicators looked. Let's check the charts, especially the Point and Figure chart and see what kind of reception we get.
In this daily bar chart of USM, below, we can see a November-February double-bottom pattern followed by a very strong straight-up rally into March. Prices have rallied above the flat 200-day moving average line and the now rising 50-day moving average line. Even though the price of USM has been up and down the past 12 months the daily On-Balance-Volume (OBV) line has been rising steadily, telling us that buyers of USM have been more aggressive for months.
The trend-following Moving Average Convergence Divergence (MACD) oscillator has been in a narrow pattern close to the zero line until this month. The Moving Average Convergence Divergence (MACD) oscillator is now clearly above the zero line in bullish territory.
In this weekly bar chart of USM, below, we can see that prices have rallied above the now flat 40-week moving average line. There is some chart resistance in $43-$46 area from 2016 and early 2017. The volume of trading was not particularly heavy in that price zone so USM may not encounter strong resistance there.
The weekly OBV line has bee moving up since late 2016 and suggests strong accumulation the past year. The weekly MACD oscillator crossed to the upside in February for a cover short buy signal. This indicator is close to crossing above the zero line for an outright go long signal.
This Point and Figure chart of USM is very bullish. Prices have made a multi-year base pattern from 2014 to date. The trade in February at $39 was a quadruple top breakout and opens the way for a longer-term price target of $57 on this kind of chart. Impressive. A trade up at $47 should be explosive and I hope we can capture on our phone.
Bottom line: A quantitative buy rating and clear reception from the charts tells me that you should look to be a buyer of USM in the $41-$39 area and on a close above $41. Risk below $37.50 for now. $47 and $57 are our upside price targets.