KTOS Stock: All Set and Ready
Ever the heard the saying “the best offense is a good defense?” This certainly holds true in today’s stock markets, as the defense sector contains a series of companies with spectacular performance numbers. This stellar performance sees no signs of abating, as the Republican government has vowed to increase spending in this area, with a focus on making America great again.
I am focusing on Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS) for a number of reasons. First, I like the lucrative defense sector, and second (and most important), the KTOS stock chart is compelling. If you have read any of my previous publications, a compelling price chart means that an opportunity is brewing, and an advancement in Kratos stock is now on the table.
A quick recap for any newbies who haven’t had the opportunity to frequent my previous publications: I generate my views on potential investments by analyzing indications on a company’s stock charts. This odd-sounding method of investment research is known as technical analysis. I have been focusing on this method of analysis for nearly two decades, because the information it provides is timely and extremely useful, especially when it’s applied to an appropriate trading strategy.
The following Kratos stock chart illustrates why I find this investment compelling.
Chart courtesy of StockCharts.com
Kratos stock is currently testing an important level of price resistance. In both 2013 and 2014, this level was tested on numerous occasions, and all attempts to move beyond this level of resistance were thwarted. It is safe to assume that breaking above this level of resistance carries a considerable amount of bullish implications.
At first glance, I can safely assume that a successful break above resistance would cause a significant rise in prices. This is under the assumption that the indicators continue to support an advance. The price pattern that created this level of resistance can be used to create a potential price objective, which would be extremely useful when setting up an appropriate investment strategy. This objective is created by taking the depth of the pattern below resistance and extrapolating that value above it. If a breakout were to occur, it would suggest that $15.00 is an attainable price objective.
The moving average convergence/divergence (MACD) indicator has been supporting the current advance that is now currently testing resistance. MACD is an indicator that uses signal-line crossings to generate a signal that is used to distinguish between bullish and bearish momentum.
This indicator has been instrumental in suggesting the predominant direction that the price is heading in. With the MACD in bullish alignment, KTOS stock has a tendency to appreciate and, while this indicator was in bearish alignment, the share prices had a tendency to depreciate. The chart above highlights instances when a bullish and a bearish signal has been engaged, and the stock price has acted in accordance with the indicator.
The most recent indication was generated in July 2016, after a bullish MACD signal was generated. This indicator has created the necessary tailwinds that have helped propel Kratos shares higher.
The following KTOS stock chart takes an in-depth view of the run-up that caused the price to test resistance.
Chart courtesy of StockCharts.com
This Kratos stock chart contains the quintessential characteristic of a bull market. This characteristic is illustrated on the chart above, using advancing and declining waves to smooth out the progression of higher highs and higher lows which create this stereotypical bullish trend.
This bullish trend has been reinforced by a bullish signal that was generated in April 2016. The signal in question is a golden cross. A golden cross is a bullish signal that is generated when the faster 50-day moving average (highlighted in blue) crosses above the slower 200-day moving average (highlighted in red). This indicator is used in the trading community to suggest that a bull market is in development because the rate of price acceleration is increasing.
This indicator was in jeopardy of averting in July 2016 but, smartly, this indicator remained intact. Averting signals are not to be taken lightly, because it takes a lot of buying pressure to prevent a bearish signal from being generated. Averted signals are very special indications, and they serve to indicate that there is a lot of inherent strength carried within this investment. It is not a coincidence that the price accelerated higher in order to avert a bearish indication.
The price action on the chart above can only be interpreted as bullish. This bullish interpretation increases the odds that the price will break above the resistance level that was highlighted earlier. This would suggest that the run toward higher prices is set to continue.
Bottom Line on Kratos
Kratos stock is now on the cusp of a technical breakout. A successful break above resistance would suggest that higher KTOS stock prices are likely to follow. The current indications support an advance, so I am expecting a breakout to occur any day now.