Post Holdings (POST) - Get Report produces packaged goods, primarily breakfast food and snack products. Its stock price has been moving higher for the last two years, establishing a well-defined uptrend line on the daily chart.
Last month that line was successfully retested. In the past, retests have been followed by a bounce and then a short period of consolidation, before the stock went on to make a higher high.
The consolidation that followed this last bounce appears to be ending, and the final phase may be underway as it advances towards another swing high.
The chart shows the successful November "double bottom" trend line test and the consolidation around the intersecting 50- and 200-day moving averages. In Friday's session, the stock penetrated a two-month downtrend line and closed in an upper candle range, which could be the signal that it is ready to rally and the technical indications are in agreement.
Daily moving average convergence/divergence is overlaid on a weekly histogram of the oscillator and is advancing on its center line on both time frames. The relative strength index has crossed above its center line and 21-period average and is tracking higher. The vortex indicator, which is designed to identify early shifts in trend direction, has made a bullish green-over-red crossover.
These are signs of positive price momentum and trend direction.
On the money flow side, the accumulation/distribution line is above its signal average. Chaikin money flow is above both its signal and center lines, suggesting the stock is seeing renewed buying interest.
Post is a long candidate at its current level, using a position size that allows for a stop under the zone of support just above the flat 50-day moving average. There is a 10% short interest in the stock and signs of another positive cycle could initiate a covering rally.
This article is commentary by an independent contributor. At the time of publication, the author held no position in the stocks mentioned.