United Therapeutics (UTHR) was upgraded today by theStreet.com's quantitative service. Regular readers of Kamich's Korner on RealMoney should know by now that I consider quantitative upgrades and downgrades as a great source of longs and potential shorts or just stocks to avoid. Let's check out the charts and technical indicators on UTHR to see if this upgrade "fits together" with what I see for the stock.
In this daily bar chart of UTHR, below, we can see a basing pattern that developed from April through November. Prices crossed above and below the 50-day moving average line but notice how the 50-day line starts to trend upwards in late November. Prices retest the rising 50-day in late November and then rally to close above the still declining 200-day line. It looks like the 200-day line starts to flatten out in December. If UTHR continues to strengthen we could soon see a bullish golden cross which is the 50-day line crossing above the 200-day line. The daily On-Balance-Volume (OBV) line bottoms in October and has firmed giving us a sign that buyers of UTHR have become more aggressive with heavier volume being transacted on daily when UTHR has closed higher. The trend-following Moving Average Convergence Divergence (MACD) oscillator is above the zero line but the two moving averages are close together and need to be watched for the next signal.
In this weekly bar chart of UTHR going back three years, below, we can see that the potential base pattern stretches back two years. Prices are above the declining 40-week moving average line but it looks like the line could flatten soon. The weekly OBV line is more constructive, I think, than the daily line. Here the OBV line turns up in March 2016 and looks like it turning up again in September. The MACD oscillator is turning up from below the zero line and could cross the zero line soon for an outright go long signal.
In this Point and Figure chart of UTHR, below, we can see that a trade up to $140 would be a bullish breakout. There is a potential longer-term upside price objective of $175.00 shown.
Bottom line -- strong charts and a quantitative upgrade are a winning combination in my book. Aggressive traders could go long UTHR on strength above $140 risking a close below $128. The $175 area is our longer-term price target.
