As lumber prices soar, it's a good time to check back in on shares of PotlatchDeltic Corp. (PCH) .
When we last reviewed PCH back on Dec. 30, we wrote that "Aggressive traders could look to go long PCH on a pullback to $48 risking to $43. The $78 area is our price target."
The shares are up from late December and lumber prices are still soaring higher.
Let's check on the latest charts of PCH.
In the daily bar chart of PCH, below, we can see that prices have continued to rise this year. PCH is trading above the positively sloped 50-day moving average line and the positively sloped 200-day moving average line.
The On-Balance-Volume (OBV) line has risen the past 12 months and tells us that buyers of PCH have been more aggressive (just like traders of lumber futures). The Moving Average Convergence Divergence (MACD) oscillator is in a take profits decline, but has spent much of the year above the zero line.
In the weekly bar chart of PCH, below, we can see a strong advance. Prices are in an uptrend above the rising 40-week moving average line.
The weekly OBV line has made a strong rise from its low of last March and confirms and supports the price rise we have seen so far. The MACD oscillator is in a bullish alignment in this time frame.
In this long-term monthly bar chart of PCH, below, we can see that prices have broken out on the upside from a very large $15 to $50 trading range or consolidation pattern. This is a huge base and should be able to support a huge rally.
In this weekly Point and Figure chart of PCH, below, we used close-only price data and a traditional scaling along with a five box reversal filter (3 boxes is the typical default). Here the software is projecting a target in the $110 area.
Bottom-line strategy: Two recommendations. If you are in the market for a new house to be built be careful if the contract has a price escalator clause (this was common in the late 1970s). Second, traders could go long PCH risking to $56. The $110 area is our longer-term price target after our $78 target.
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