How Much Higher Can These 4 Breakout Stocks Climb?

By: Wayne Duggan

As the U.S. markets roll into the last month of 2015, several big-name stocks have been breaking out to new 52-week highs. Is it too late to be buying these stocks now, or is there more upside remaining? Here’s a look at what technical analysis says about how much higher these four breakout stocks can climb in the short-term.

Lowe’s Companies, Inc. (NYSE: LOW)

From September 2013 to September 2014, Lowes traded in a horizontal channel between $43 and $50. Then, after about a year of consolidation, the stock broke out above $50 and never looked back until it reached $75 in early 2015. For most of this year, the stock has again been range-bound, this time between $65 and $75. However, within the past couple of weeks, Lowes has broken out above $75 for the first time.

How much higher can it go from here? If the previous breakout is a sign of things to come, Lowe’s could be in for a 50% gain within the next six months to around the $112.50 level. Lowe’s traders should be watching for any move back below the $75 level as a sign of a technical breakdown.

Nike Inc (NYSE: NKE)

Nike’s recent push to new all-time highs is not really a break-out as much as it is seemingly the status quo for the growing company. Nike’s stock is up 508% in the past decade, so shareholders are certainly used to the stock making new highs. For now, Nike’s recent push above $130 means that the stock continues trading inside its multi-year upward channel.

While that’s good news for long-term investors, it likely means very little upside remaining in coming weeks for short-term traders.

Campbell Soup Company (NYSE: CPB)

Campbell is another example of a stock at all-time highs that has a strong long-term technical outlook but a weak short-term outlook. Above $53, Campbell’s stock is near the ceiling of its upward-channel and could soon see a pullback to the $48-49 level, the floor of the channel. Long-term investors are fine with a pullback, as long as the stock stays within the channel.

Short-term traders, however, should be looking elsewhere for alpha.

CVR Energy, Inc. (NYSE: CVI)

Refiner CVR Energy is a slightly more complicated case. Of the four stocks, CVR has the most uncertain longer-term technical outlook. Clearly, the company has some short-term momentum pushing it to new 52-week highs.

The two green lines in the chart represent short-term and long-term support levels at around $42.50 and $30, respectively. The two red lines represent short-term and long-term resistance at around $50 and $55, respectively.

The blue line at $47.80 represents the stock’s 2014 high. While it’s true that CVR recently traded above this level, it was only by a matter of cents, which is far from a convincing break-out.

The behavior of the stock over the next few weeks will be critical in determining whether the $47.80 level has in fact been breached, which could mean a test of $55 sometime in early 2016. Conversely, if the recent move was merely a false breakout, the stock could soon be headed back down to the bottom of the channel at $42.50.

Disclosure: the author holds no position in the stocks mentioned.

Lightspeed Financial Services Group LLC is not affiliated with these third-party market commentators/educators or service providers. Data, information, and material (“content”) are provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities or contracts. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lightspeed Financial Services Group LLC does not endorse, offer nor recommend any of the services or commentary provided by any of the market commentators/educators or service providers and any information used to execute any trading strategies are solely based on the independent analysis of the user.

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