ZTO Express (ZTO) was upgraded today to a buy by TheStreet.com's quantitative service. Regular readers of Kamich's Korner should remember the numerous times I have combined quantitative recommendations with the charts and indicators. Let's do that again.
In this daily bar chart of ZTO, below, we can see how the price of ZTO made a round trip from April to July and back down again to October. The 50-day moving average line turned positive in late April and then bearish in August. ZTO is now testing the declining 50-day line and is less than one dollar below the flattening 200-day line. The daily On-Balance-Volume (OBV) line shows a rise for April and May and then a decline to early October. It looks like the OBV line has begun to improve in October and that is a sign that buyers of ZTO have become more aggressive. The daily Moving Average Convergence Divergence (MACD) oscillator gave a cover shorts buy signal in early October and is now not far below the zero line for an outright go long signal.
In this weekly bar chart of ZTO, below, we can see that prices are below the flat 40-week moving average line. The weekly OBV line stayed steady even when prices weakened suggesting that the buyers in April and May largely held their positions. The weekly MACD oscillator is bearish but could narrow in the weeks ahead towards a cover shorts buy signal.
In this Point and Figure chart of ZTO, below, we can see an upside price target of $20.
Bottom line strategy: aggressive traders could go long ZTO at current levels and risk a close below $15. $20 is our first upside price target.
