More news stories lately have been covering the issue of water shortages in various parts of the world. These shortages are impacting living conditions and agriculture as droughts can last years. Matt Damon's involvement in www.water.org is doing good work but much more is needed.
TheStreet's Action Alerts PLUS portfolio has a holding American Water Works Co. (AWK) , but let's check out the charts of a more diversified water investment, Invesco Water Resources ETF (PHO) , to see if there is an opportunity in water.
In this daily bar chart of PHO, below, I can see that prices have been in a rising trend from a low in October. Prices successfully tested the rising 200-day moving average line in March and May and now trade firmly above the rising 50-day moving average line as well as the rising 200-day line. The math-driven On-Balance-Volume (OBV) line has moved higher since October, telling me that buyers of PHO have been more aggressive than sellers. The Moving Average Convergence Divergence (MACD) oscillator has been bullish since early May.
In this weekly Japanese candlestick chart of PHO, below, I can see the past three years of price action. Prices made a big rally from 2020 and into early 2022 before correcting lower. PHO has made an upper-level base pattern and recently broke above the neckline around $55. Prices trade above the rising 40-week moving average line. The weekly OBV has been creeping upward from October and tells me that buyers are more aggressive than sellers. The MACD oscillator is in a bullish alignment.
In this daily Point and Figure chart of PHO, below, I have a visual picture of the intraday price action that ignores time and volume. Here the software projects an upside price target in the $76 area.
In this second Point and Figure chart of PHO, below, I used a five-box reversal filter. Here the software suggests a longer-term price target in the $105 area.
Bottom line strategy: Need more convincing on the precious nature of water or just want to do some research on the subject? Go
here. Investors could go long PHO at current levels, risking to $54 for now. My first price target is $76 after $61. Longer term, the $105 area could be reached.
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