Kroger Co. (Friday’s close $31.66) declined from $42.75 to $20.46 (A-B) below a falling trend-line and below its falling 40-week Moving Average (40wMA). Subsequently, the stock settled in a large, bullish technical pattern known as a “W” formation (dashed lines). The recent rise to $33.70 suggests a breakout from this pattern and the start of a new major up-leg (C). A sustained rise above ±$34 would confirm it.
Behaviour indicators including the rising 40wMA confirm the bullish status. There is good support near $27-28 where the stock has maintained support throughout the recent market weakness (shaded area). Only a sustained decline below $26-27 would be negative.
Point & Figure measurements provide targets of $37 and $40. The large “W” pattern (dashed lines) supports higher targets.
Monica Rizk is the senior Technical Analyst and Ron Meisels is the president of Phases & Cycles Inc. (www.phases-cycles.com). And he tweets at @Ronsbriefs. They may hold shares in companies profiled.
Chart source: www.decisionplus.com