BorgWarner (BWA) has basically traded sideways for much of the year but a pending upside breakout is likely to reward traders and investors with nice returns in the weeks ahead.
Here are my technical reasons.
In this one-year daily bar chart of BWA, below, we can see that BWA is up to the starting line in terms of its technical position. Over the past two months, BWA has traded above the now rising 200-day simple moving average line. Dips to the average line over the past six weeks have been buying opportunities. Prices are also above the flat 50-day average. The volume histogram just below the price chart shows that the volume of trading has been heavier the past three months and is a sign of increased interest in the stock.
The On-Balance-Volume (OBV) line rose with the price action in July and August and while neutral right now, the line it is not diverging from the price action. The Moving Average Convergence Divergence (MACD) oscillator is slightly above the zero line and thus is a technical positive.
While you may consider the daily chart of BWA as neutral, this weekly chart, below, is very much in the bullish camp. BWA is above the rising 40-week moving average line. While the daily OBV line is neutral this weekly OBV line signals very strong accumulation.
The MACD oscillator gave a crossover cover shorts buy signal back in early March and is very close to an outright signal by crossing above the zero line.
Strategy: Aggressive traders could buy BWA here and accelerate their long position when BWA reaches $37. Our longer-term upside target is just short of the speed limit, or around $52. Use a sell-stop under $33 for now.