Shares of the confectioner Tootsie Roll Industries (TR - Get Report) were up 2.3% in Tuesday's session on a better than expected earnings report. They have returned to retest horizontal resistance in the $39.00 area and the 50 day moving average. Price action this year has formed a rounded bottoming base above the 200 day moving average, a consolidation similar to the one in October 2016 that preceded a 15% rally into the end of that year.
Tootsie Roll's technical indicators are also in a similar configuration with the relative strength index crossing over its 21 period average and centerline, and moving average convergence/divergence approaching its center line after having made a bullish crossover.
Money flow indicators are improving and the jump in price on Tuesday was accompanied by a spike in volume. The stock is a long candidate after another close above the $39.00 level with a trailing percentage stop.
The stock price had risen over 21% this year, but it pulled back more recently in a consolidation phase similar to others that have been a part of the rally process. In contrast to its competitor in the sweets sector, shares declined 2.5% in trading on Tuesday, closing near their low and forming a large dark candle.
The stochastics oscillator is moving down and out of an overbought condition and moving average convergence/divergence is making a bearish crossover.
Money flow remains positive, but volume has dropped below the 50 day moving average of volume. The stock is a speculative short after a lower candle close below the uptrend line that delineates the rally this year, using a trailing buy-to-cover stop.