A strong push from Garmin (GRMN) last week finally catches price action to the underlying bullish technical setup.
Bulls need to watch two levels here: $40 and $42.70. Many traders do not like the risk-reward for buying the first week of the breakout, so here we're looking for either a follow-through pushing past $42.70 or a retracement that does not violate $40 on the downside. My preference here is to look for a pullback around 1/3 of the original push, so something around $0.80, but nothing more than a buck to the downside. The upside target here measure $5 to the $45 level, which also ties to the highs of last June.
The Full Stochastics already show a consolidation just below 80 and, after a quick dip, the indicator has crossed over bullish. While the Chaikan Oscillator did not cross bearish, we did see it bounce back off the 13-week simple moving average. We've seen no loss of trend or momentum on the longer view when examining the MACD and StochRSI.
Pulling back to the monthly chart, we see the RSI now pushing over 50, confirming the bullish nature of the breakout. While the MACD has not crossed bullish, it won't take much to push it into the green at the end of this month. The price pattern is a bit messy, but 2016 has witnessed Garmin breaking out from a bearish channel after forming a floor just under $35 over the winter. The longer-term upside here looks to be around $50 over the next 6-9 months, which wouldn't be too bad given the 4%-plus yield holders of this name receive. Earnings are forthcoming, so I would consider a hedge to get through the short-term catalyst, but overall, this has a longer-term attractive setup.