Stericycle(SRCL) - Get Report has been treading water in a sideways consolidation pattern since mid February. During this healthy action, the stock has held above a key support zone. With an added boost from positive Barclays comments, SRCL is now setting up well for an upside breakout.
Back on Feb. 16, Stericycle exploded to the upside following its fourth-quarter earnings report. The stock finished with a 7.7% gain on extremely heavy trade. This powerful breakout move left behind a major bottom near the 2016/2017 lows. Since the February peak, SRCL has held key support while an overhead 200-day moving average has contained multi-week highs. A clear break through the upper band of this pattern could spark a big up move.
In the near term, SRCL remains in a low-risk buy zone. A key upside hurdle is the March high near $84.85. Once past this level, the stock will have room to run. On the downside, a take out of the $79.00 would violate the March low, signalling the 200-day moving average still controls the action. Of note, SRCL sports a very high short-interest ratio (7.3). If the stock can begin to put some distance on the March peak, the unwinding of these bearish positions will add considerable fuel to a fresh rally.