Itron Looking Extended on the Grid

 | Sep 13, 2016 | 3:03 PM EDT
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Itron  (ITRI) has rallied strongly this year, with prices climbing to over $54 recently from under $30 back in January. Prices are extended (overbought) and a pullback or correction would be welcomed and a chance to add to longs or start a new position.

In this daily chart of ITRI, above, we can see the rapid rally from an August low near $40 to over $54 recently. A $14 rally on a $40 stock in a short period of time is the simple definition of "extended." Some call it overbought: a security that has gone up too far and too fast. Rapid gains can be sometimes followed by a correction and if the prior base pattern was solid, then a correction is an opportunity to go long. ITRI is above its rising 50-day moving average and above the rising 200-day line. The On-Balance-Volume (OBV) line is positive and the Moving Average Convergence Divergence (MACD) oscillator is above the zero line, but the two lines look like they are poised to cross in the coming days. A crossover above the zero is a "liquidate longs sell signal" for the MACD oscillator.

In this weekly chart we see a strong-looking security. Prices are above the rising 40-week moving average line. The OBV line on this weekly time frame is also bullish and signals accumulation. The weekly MACD oscillator is also very strong. When the weekly chart is strong and the short-term chart is extended, it becomes an easier decision about buying a pullback in an ongoing uptrend.

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