LIFE Healthcare has experienced remarkable growth in recent years and is now one of the top 50 stocks on the JSE by market capitalisation
. Its chart is giving a new breakout, pointing to further upside to come.
Life Healthcare (LHC): Upside breakout
Recommendation: Medium-term buy. Buy on a pullback.
Trend: Short-term trend is up. Medium-term trend turning up.
n Life Healthcare is in a well-established long-term uptrend, and recently broke out of a medium-term symmetrical triangle (lines 1 and 2), after consolidating for the past few months. There is a clear higher target from this pattern.
n Its short-term stochastic (on top) is pulling back from an overbought level, and is likely to pull back a bit more before the stock continues rallying.
n While medium-term players can buy now, short-term traders wait for more pullback to get in at R33.60 or lower. (Traders can buy now as long as they are prepared to hold through any further pullback).
n The minimum upside target is R39.50, based on the height of the triangle projected up. Place your initial stop-loss as a closing price below line 1 at R31.80.
Colin Abrams is an independent technical analyst. To subscribe to recommendations, or attend courses, go to www.themarket.co.za.