The American provider of stock photography, stock footage, stock music, and editing tools headquartered in New York City, Shutterstock Inc. (NYSE: SSTK) shows signs of an upcoming price surge according to its latest charts.
Bullish Indications
#1 Channel Breakout: The daily chart of SSTK shows that the stock has been trading within a channel for the past few months. This channel is marked in the daily chart in purple color. Currently, the stock has broken out of this channel, indicating that it has the potential to surge ahead.
Daily Chart – SSTK
#2 Double Bottom Breakout: In the daily chart, we can see that the stock had recently broken out of a double bottom pattern. This pattern is marked in the chart in pink color. A double bottom pattern is a strong bullish pattern and indicates that the stock may move higher in the short term.
#4 MACD above Signal Line: As you can see from the daily chart, the MACD line (blue color) is currently above the signal line (orange color).
This indicates a possible bullish bias.
#5 Bullish Stochastic: The %K (blue) line of stochastic is currently above the %D (Orange) line in the daily chart.
This is a possible bullish indication.
#6 Symmetrical Triangle Pattern Breakout: The weekly chart shows that the stock has been forming a symmetrical triangle pattern. This pattern is shown as purple lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out. This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper line occurs, it usually signifies the start of a new bullish trend. Currently, the stock has broken out of the symmetrical triangle pattern, indicating possible bullishness.
Weekly Chart – SSTK
#7 Bullish MACD: The MACD line is above the signal line in the weekly chart as well, indicating a possible bullish bias.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase half the intended quantity of shares of SSTK at the current price of $41.10. The rest of the shares can be purchased if the stock corrects to the breakout level of the Double Bottom pattern at around $38.60.
TP: Our target prices are $50 and $60 in the next 3-6 months.
SL: To limit risk, place a stop loss at $36.80 (for entry near $41.10) and $33.70 (for entry near $38.60). Note that this stop loss is on a closing basis.
Our target potential upside is almost 21% to 55% in the next 3-6 months.
- Entry near $38.60: For a risk of $4.90, our target rewards are $11.40 and $21.40. This is almost 1:2 and 1:4 risk-reward trade.
- Entry near $41.10: For a risk of $4.30, our target rewards are $8.90 and $18.90. This is almost 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the channel. 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 the sector.
Happy Trading!
Tara
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