Sanderson Farms (SAFM) was upgraded today to Buy by TheStreet.com's quantitative service. After reviewing the charts and indicators I would agree.
In this daily bar chart of SAFM, below, we can see a sideways consolidation pattern from last June to early January with prices bounded roughly by $95 on the downside and the $110-$115 area above.
In January we got to see a bullish golden cross as the 50-day moving average line crossed above the slower 200-day line. The 50-day line was tested in early March and later in March as well as the end of May.
The volume pattern has been uneven but you can see the On-Balance-Volume (OBV) line take flight from December. The OBV line has made a new high recently and could be foreshadowing a new price high.
The Moving Average Convergence Divergence (MACD) oscillator is turning up to a cover shorts buy signal.
In this weekly bar chart of SAFM, below, there's a mixed picture. SAFM is above the rising 40-week moving average line.
The volume of trading looks like it has expanded the past few months but the weekly OBV line is a bit disappointing.
The MACD oscillator on this longer time frame is well above the zero line in bullish territory but it has narrowed and could cross to the downside for a take profits sell signal.
In this Point and Figure chart of SAFM, below, we can see a potential upside price target of $162.
Bottom line strategy: Aggressive traders could go long SAFM in the $145-$140 area risking a close below $133 while looking for gains to the low $160's.
