Container Store Stock Begins New Uptrend

Earlier this year, I discussed what I look for when choosing a stock fund using Twitter, Inc. (TWTR) as an example. Today I want to look at The Container Store Group, Inc. (TCS) because it exhibits similar characteristics that suggest the stock has started a new long-term uptrend.

Below is a 4.5-year daily chart for The Container Store showing its roughly 90% decline from its post-IPO highs. After its massive decline, the stock became limited between $3.50 and $8.50 starting in 2016 and remained so until last week, basing and waiting for a resolution to establish the next long directional move. term.

An upward earnings surprise was the catalyst to help prices break out of its range. This gap above the resistance signals an overwhelming amount of demand for the stock, which continued with three days of strong upside. With 14% of free float ahead of the event and all four analysts covering the stock rating it as a hold, negative sentiment and positioning certainly contributed to the recent move. Although current prices do not offer the best reward/risk scenario, we want to buy any weakness in the stock towards $8.30, as our initial price target is near $15.50.

The essential

Container Store stock is up around 70% in three days, but the above conditions suggest it has moved from a range to a long-term uptrend. This is an excellent real-time example and trading opportunity. (See also: Technical analysis: the use of the trend.)

While it may seem counter-intuitive to look at a stock after it has rallied so aggressively over a short period, there has been a huge opportunity cost in trying to time the long trend. term rather than waiting for confirmation. Technical analysis is all about participating in the relevant trend for your time frame, so now that a medium/long term trend has been established, we can step in and catch the majority of it.

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