Here are three stocks in the packaging industry that have been undergoing price consolidation for the last two months and now look prepared to break out of their respective patterns and move higher.
Bemis (BMS) shares have been consolidating for the last two months. and in the process, they formed a cup and handle pattern on the daily chart. Last week, the stock broke back above its 50-day moving average, and in Wednesday's session, it took out rim line resistance in the $51.90 area. The relative strength index has crossed above its center line, and moving average convergence/divergence is making a bullish crossover above its center line. Money flow has been positive in this stock since the beginning of the year, while Chaikin money flow is over its elevated 21-period average and accumulation distribution is tracking above a rising signal line.
Bemis is buy at its current level using a trailing percentage stop.
Packaging Corp. of America
Packaging Corp. of America (PKG - Get Report) has been making lower highs for the last month above static horizontal support on the $62.50 level. The price action over the last two months has formed a rudimentary rising triangle pattern, and Wednesday's strong session penetrated the 50-day moving average, closing above the triangle downtrend line. Moving average convergence/divergence is attempting a bullish crossover just above its center line, and the relative strength index is crossing its single average and center line. Chaikin money flow is reflecting strong buying interest, and the accumulation/distribution line is continuing on its upward trajectory.
The break is being supported by the positive price momentum and money flow indications, which makes the stock a long candidate, utilizing a trailing percentage stop.
Graphic Packaging (GPK - Get Report) has some work to do to before it is a long candidate. It had been trading in a horizontal channel but broke through channel support in trading last week. It had a strong session on Wednesday, forming a large white candle and closing near the high of the day and at the channel bottom. The momentum indicators are reflecting the price action in June that took the stock from a test of channel resistance to the recent break below pattern support. Chaikin money flow is in negative territory, but the money flow index, a volume-weighted relative strength measure, has crossed above both its 21-period average and center line.
The stock has to recapture and hold above the $25.60 support-turned-resistance level, and money flow will have to continue to improve before it becomes a long candidate.