The American multinational infrastructure engineering and construction company based in Coral Gables, Florida, MasTec, Inc. (NYSE: MTZ) seem to be gearing up for a surge as per its latest charts.
Bullish Indications
#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has broken out of a Symmetrical Triangle pattern. This is a continuation pattern and is characterized by two converging trend lines connecting a series of sequential peaks and troughs. This pattern is marked on the daily chart as pink lines. The breakout from a symmetrical triangle pattern usually signifies the start of a bullish move.
Daily Chart – MTZ
#2 Price above MAs: The price is currently above both the short-term moving average of 50-day SMA and the longer-term moving average of 200-day SMA. This usually implies a possible bullish bias for the stock.
This is a possible bullish setup.
#4 Bullish Aroon: The Aroon indicator denotes bullishness, as the value of Aroon Up (orange line) is above 70 while Aroon Down (blue line) is below 30 in the daily chart.
#5 Downtrend Channel Breakout: The daily chart shows that the stock had formed a trend channel in the last few months.
Currently, the stock has broken out of this trend channel, which is a possible bullish sign.
#6 Flag Pattern: The weekly chart shows that the stock was in a strong uptrend after which it started consolidating and was in a narrowing range. This is a classic flag pattern and is marked in the chart below in purple color. A flag is a continuation pattern. Whenever a stock breaks out of the flag pattern, it typically continues its previous trend (uptrend in this case).
Weekly Chart – MTZ
#7 MACD above Signal Line: As you can see from the weekly chart, the MACD line (blue color) is currently above the signal line (orange color), indicating a bullish bias.
#8 %K above %D: The %K line of the stochastic is currently above the %D line in the weekly chart, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase half the intended quantity of shares of MTZ at the current price of $47.26 and the rest in the case of two scenarios
- If the stock corrects to the support level of $44.
- If the stock closes above the resistance level of $53.
TP: Our target prices are $60 and $70 in the next 3-6 months.
SL: To limit risk, place a stop loss at $42.30 (for entry near $44 and $47.26) and $50.50 (for entry near $53). Note that this stop loss is on a closing basis.
Our target potential upside is nearly 13% to 59% in the next 3-6 months.
- Entry at $44: For a risk of $1.70, the target rewards are $16.00 and $26.00. This is a nearly 1:9 and 1:15 risk-reward trade.
- Entry at $47.26: For a risk of $4.96, the target rewards are $12.74 and $22.74. This is a nearly 1:3 and 1:5 risk-reward trade.
- Entry at $53: For a risk of $2.50, the target rewards are $7.00 and $17.00. This is a nearly 1:3 and 1:7 risk-reward trade.
In other words, this trade offers nearly 3x to 15x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the symmetrical triangle pattern. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in its sector.
Happy Trading!
Tara