Sensient Technologies Corp. (SXT) was upgraded today to a buy by TheStreet's quantitative service. SXT is part of the flavors and fragrance market but instead of taste and smell I want to be more visual and look at the charts and indicators to see the quantitative approach and the technical approach can work together.
In this updated daily bar chart of SXT, below, we can see how prices have been turning from a downtrend to a basing pattern over the past five months. Earlier this month prices rallied above the now rising 50-day moving average line.
SXT just touched the underside of the flat 200-day moving average line. Rallies to the underside of the 200-day average failed in late November and the middle of March but this time looks different.
The level of trading volume shows an increase from the middle of May and the daily On-Balance-Volume (OBV) line has turned up from late May. A rising OBV line happens when buyers of a stock are more aggressive.
The trend-following Moving Average Convergence Divergence (MACD) oscillator has been below the zero line for most of the past 12 months but it crossed to the upside in early June.
In this weekly bar chart of SXT, below, we can see that prices have rallied to the underside of the declining 40-week moving average line. It looks like the 40-week line has started to flatten.
The weekly OBV line looks like it has broken its decline from December.
The weekly MACD oscillator has turned up to a cover shorts buy signal. A move above the zero line will be an outright go long signal should it happen in the weeks ahead.
In this Point and Figure chart of SXT, below, we can see a double bottom at $65.32. A trade at $75.44 will be a breakout on the upside and open the way to the bullish price objective of $87.40.
Bottom line: SXT looks poised for an upside breakout. Our quantitative service ranks it a buy and the charts support that view. Aggressive traders could go long SXT here and on strength above $73. Risk below $69 looking for gains to the mid-$80's.