KeyCorp. Has Broken Out on the Upside

 | Dec 08, 2017 | 9:09 AM EST
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The share prices of Cleveland, Ohio headquartered KeyCorp. (KEY) are breaking out on the upside. Where should we consider buying them and where should we risk? In an article Friday morning, Jim Cramer makes the case that a selloff in the banks now would be a gift for investors, and calls the banking sector a "fabulous buy" for next year. Let's turn to the latest charts and indicators for some guidance.
 
In this daily bar chart of KEY, below, we can see a prolonged sideways consolidation. Prices have been stuck in a $16.50 to $19.50 trading range for the past 12 months. Prices have recently pushed up to a new high, and our favorite indicators are confirming the move north. KEY is above the rising 50-day moving average line and above the flat 200-day moving average line.
 
The 50-day line crossed above the 200-day line last month for a bullish golden cross. The daily On-Balance-Volume (OBV) line pushed up to a new high, with prices following a strong move up in September. A rising OBV line tells us that buyers of KEY have been more aggressive than sellers. The trend-following Moving Average Convergence Divergence (MACD) oscillator just turned up above the zero line for an outright go long signal.
 
 
 
In this weekly bar chart of KEY, below, we can see the 2016 rally and the 2017 sideways consolidation pattern. The recent upside move is confirmed by the indicators. Prices are above the flat 40-week moving average line. The weekly OBV line has risen the past four months, and the weekly MACD oscillator is turning up from above the zero line.
 
 
 
In this Point and Figure chart of KEY, below, we can see a big base pattern from 2008 to 2014. The recent trade at $19.50 was a breakout on this chart, and opens the way for a possible price target of $36.50.
 
 
Bottom line: traders and investors can go long here or add to longs, risking a close below $18 and looking for gains to the mid-$30s. KEY is a holding in the  Action Alerts PLUS portfolio, which Cramer co-manages as a charitable trust.

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