PPG Industries Is Set Up Well for More Upside

NEW YORK (TheStreet) -- PPG Industries  (PPG) rested on Friday after three straight days of gains. Upside trading was robust last week and featured the heaviest back-to-back gains this year for the stock, which is setting up for more upside and a potential buying opportunity as we kick off the new week.

The basic-materials stock is bumping up against its April high at $116.55 and has a solid layer of support just underneath. Another session or two of above average bullish interest and the stock will be challenging its 2015 peak near $119.

During the two weeks prior to PPG's breakout move on Wednesday, which pushed shares above a key trend line that linked the April and May highs, the stock held in a very narrow range. The top band of this range, the initial June high at $115.15, is now a very solid support level. The lower band is marked by the stock's current June low of $113.25. A close below this key level would put the stock back in consolidation mode.

As a new week begins, PPG should be considered a low risk buy between $115.50 and $113.50. A close below $113 would neutralize Wednesday's breakout move.

PPG traced out a powerful bull run off the Oct. 15 spike low. Just 11 weeks later the stock had surged over 35% before topping out just before year's end. The stock managed a slightly higher high in late February of this year, but the upside momentum in last year's fourth quarter was gone. As a result, PPG has been consolidating all of this year while giving back very little of the October run.

With back-to-back higher monthly lows in place and a nice uptick in bullish interest last week, this healthy sideways action may soon give way to a new bull leg. PPG has room to run on the upside and is far from overbought as per its moving average convergence/divergence indicator. The February/March highs near $119 will be a challenge. A slight pullback from here may be needed before new 2015 highs are reached.

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At the time of publication, Morrow had no positions in the stock mentioned.

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