H&R Block (HRB) has made an interesting bottom pattern for the past 12 months and is breaking out on the upside after tax season. It looks like a rally to the low $30s is underway. I didn't do any channel checks, but it looks like Watson has figured out how to grow this competitive business.
Let's check the charts and indicators before Watson figures out how to do my job.
In this daily bar chart of HRB, above, we can see a five-dollar trading range or consolidation pattern bounded by $20 on the downside and $25 on the upside. As prices moved sideways the 50-day moving average line also moved sideways. Notice how the slower-to-respond 200-day moving average line has bottomed since January and in the past two months HRB has stayed above this indicator of trend. The slope of the 50-day average turned upward in April. The On-Balance-Volume (OBV) line rises over the past 12 months, suggesting that buyers have been more aggressive even though the trend has been neutral. Since late February it looks like the OBV line is rising faster and the volume of trading has been heavier -- this is bullish. The Moving Average Convergence Divergence (MACD) oscillator just turned upward again, giving a fresh outright go-long signal.
In this weekly chart of HRB, above, we can see that prices are now above the slightly rising 40-week moving average line. The weekly OBV line is at the highest level it has been looking back three years. The weekly MACD oscillator just crossed the zero line for a buy signal.
Bottom line: Paper file, e-file, whatever, but HRB looks like it is heading higher from here. Traders could go long HRB at current levels and risk a close below $23. The $31-$32 area is our intermediate-term price objective.