So far in October, Angie’s List (ANGI) has been flashing plenty of bullish signals – 11 in total – and is up 23.5% while the rest of the Nasdaq is down 6.2%.
ANGI really took off after the Financial Times reported on Sept. 30 that the company may put itself up for sale. Shortly thereafter, analysts at Wunderlich Securities reiterated their “buy” rating and $13 price target, saying that “a potential buyer could create substantial value” by acquiring Angie’s List’s user reviews, service-provider data and ad relationships.
At the Oct. 13 close, the Profit Scanner powered by Recognia identified a bullish Flag pattern in ANGI’s chart with potential upside of 12%-15%.
On Monday, ANGI closed at $7.81, and from there the Profit Scanner expects the shares to reach the $8.80-$9 level in five trading days. As you can see, the bullish Flag was one of three bullish signals that day, on volume of more than 1 million shares traded:
The bullish Flag pattern tells us that the price seems to be resuming a sharp rally after taking a brief pause. It typically occurs during a dynamic market rally, representing a brief pause as the market “catches its breath” before running off again in the same direction. As demonstrated by the chart below, the pattern consists of two parallel trend lines, often sloping downward against the prevailing uptrend, and is confirmed when the price breaks through the upper boundary to resume the rise.
Traders looking to enter a bullish position in Angie’s List should note that resistance is close by, at $7.86. A resistance level acts as a ceiling where a tendency for excessive selling has kept the price lower. More conservative traders would want to see ANGI penetrate above that $7.86 resistance before entering their long positions, as that can signal a further rise – and luckily, early Tuesday trading shows ANGI trading nicely higher above resistance. Support is also not too far away, at $7.67, and is a popular level at which to place a stop just below.
In this case, the Profit Scanner recommends a tight stop a little farther down, at a close below $7.11. That being said, the recent trading volume in ANGI shares supports the expected further rally to $8.80-$9. In the bullish Flag pattern, volume should diminish noticeably as it forms, then spike higher on the day the pattern is confirmed – and that’s just what happened here: a volume increase of more than 60,000 shares on Monday.
For those who would prefer to trade Angie’s List via options, the ANGI Nov. $7.50 calls have open interest of about 1,200 and are low-priced, trading around $0.80. On a rally to the Profit Scanner’s target range of $8.80-$9, these calls would in turn spike significantly higher, so the profit potential here is compelling.
Profit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.
