RYAM Stock Is Poised to Make Further Gains

ryam stock analysis
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RYAM Stock: One of Only a Handful

The same old story continues. Volatility is elevated, the markets are gyrating violently, and emotions are starting to run high. As a result, this type of price action is conducive of lower index values because many investors would rather seek shelter on the sidelines than have to deal with the roller coaster environment that is currently engaging the markets. In all honesty, who can blame them? The only solace I can offer in a difficult market, like this one, is that the volatility will eventually subside, cooler heads will once again prevail, and the markets will make another attempt at a sustained advance.

Currently, there are only a handful of stocks making an advance. Making any headway in this type of market is a sign of inherent strength and it is something that should not be dismissed. As a result, I have chosen to focus on Rayonier Advanced Materials Inc (NYSE:RYAM) stock because it is one of the select few stocks currently bucking the trend.

Aside from just advancing in this treacherous market, I like Rayonier Advanced Materials stock because a number of technical indicators have been generated on the RYAM stock chart, suggesting that this investment is currently geared toward higher stock prices.

The first indication that piqued my interest was a completed technical price pattern, which is highlighted on the following Rayonier Advanced Materials stock chart.

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Chart courtesy of StockCharts.com

The technical price pattern highlighted on the RYAM stock chart is called a cup and handle pattern.

Cup and handle patterns develop when a significant level of price resistance prevents the stock price from advancing beyond it. This inability to break above price resistance causes the stock price to dip. These dips create two distinct troughs, where the first trough is much larger than the second. These troughs paint the picture that characterizes this technical price pattern, which is appropriately named a cup and handle pattern.

The significant level of price resistance that created this pattern resided at $21.00, and it was first established on December 28, 2017. This pattern was in development for three months until that fateful day on March 28, 2018, when it was finally able to sustain a close above it. This completed cup and handle price pattern implies that the RYAM stock price has been set free to appreciate.

This notion of higher Rayonier Advanced Materials stock prices is being reinforced by the wave structure highlighted on the following RYAM stock chart.

Chart courtesy of StockCharts.com

This Rayonier Advanced Materials stock chart illustrates that ever since RYAM stock began appreciating in early November, the move toward higher prices has been constructive in nature.

Constructive price action consists of two distinct waves: an impulse wave and a consolidation wave. In a bullish trend, these waves work together in order to create and sustain the trend.

The wave highlighted in green is an impulse wave, and this wave defines the period in a bullish trend when a stock makes a sustained and uninterrupted move toward higher prices. Due to the advancing nature of an impulse wave, all the gains are captured within it.

The wave highlighted in purple is a consolidation wave, and this wave defines the period in a bullish trend when the stock price corrects and refrains from advancing. This wave is a necessary component of a bullish trend because it unwinds overbought conditions, creating the necessary environment where an impulse wave can initiate. Due to the corrective nature of a consolidation wave, all the losses are captured within it.

The completed cup and handle pattern doubles as a completed consolidation wave, which is implying that an impulse wave is now in development and higher Rayonier Advanced Materials stock prices are therefore likely to follow.

In order to quantify a potential price objective, the wave structure comes in handy once again. This price objective is based on the theory that a consolidation wave acts as a midpoint in a trend, and that the impulse wave in development should therefore mirror the impulse wave that preceded it. Putting this theory to work creates a potential price objective for RYAM stock at $25.00.

Analyst Take

I am bullish on Rayonier Advanced Materials stock because a completed technical price pattern and a constructive wave structure are suggesting that higher RYAM stock prices are on the horizon, and therefore, such a view is warranted.