Stanley Black & Decker (SWK) broke out sharply to the upside Friday and we are seeing follow-through strength today. SWK has been in an uptrend for a number of years and, with no signs or warning flags of a top or reversal, we remain bullish.
SWK tested the rising 50-day simple moving average line last week but there are other bullish clues we need to examine. A look at the latest charts and indicators should keep us on track.
In this daily bar chart, above, we can see how SWK has turned higher from February onward as price moved above a six-month consolidation pattern. From August through January, SWK was largely in a $115 to $125 trading range until the latter part of February. January looks to be the turning point as the slopes of both the 50-day and 200-day moving average lines turned up. The daily On-Balance-Volume (OBV) also turns upward in January as traders turned more aggressive with heavier volume being seen on days when SWK has closed higher on the day. Last week, the Moving Average Convergence Divergence (MACD) oscillator crossed to the upside above the zero line, giving us a fresh outright go-long signal.
In this weekly bar chart of SWK, above, we can see prices are above the rising 40-week moving average line. The weekly OBV line has risen steadily the past three years, so we have no bearish divergences on our radar. The trend-following MACD oscillator has been in a bullish mode since last April and it is still pointed higher.
In this Point and Figure chart of SWK, above, we can see a fresh upside breakout to $140 and a longer-term potential upside price target of $162.
Bottom line: SWK has started a new leg to the upside. Existing longs should raise sell stops to a close below $129 and aggressive traders who want to add to positions should consider buying SWK on any one-day dip this week. Gains to the low $160s are our price objective.