Sunrun Stock Is a Bright Spot in a Gloomy Market
I am almost certain that many investors are frustrated with the performance of the market in recent weeks and, more importantly, their own investments. I am here to spread some holiday cheer because it is that time of year. Let’s focus on the bright spots, because not everything is as gloomy as the headlines make them out to be.
One bright spot is a company called—no pun intended—Sunrun Inc (NASDAQ:RUN). It’s a clean energy company that provides rooftop solar and storage solutions for residential homeowners looking to cut costs and reduce their carbon footprint.
The reason I’m intrigued by this clean energy company is that the price action on the Sunrun stock chart has been on point and pristine. Its accuracy is suggesting that the stock abides by the rules set out by technical analysis.
If this is indeed the case, I have some good news to share. The technicals are pointing up, suggesting that much higher RUN stock prices are on the horizon.
Let’s begin with something simple, the 200-day exponential moving average. This metric is highlighted on the following chart.
Chart courtesy of StockCharts.com
This stock chart captures the price action since February 2018. I have added the 200-day exponential moving average in order to display how Sunrun stock has been abiding by it.
I chose February as the starting point because on February 14, RUN stock broke above the 200-week exponential moving average and has been trading above it ever since.
After the Sunrun share price peaked in July, a correction quickly followed and the stock found support right on this metric.
This is an important indication because the 200-day exponential moving average acts like a dividing line that separates a stock in a bullish state from a stock in a bearish one.
These polar opposites simply suggest that, when a stock is in a bullish state, it is likely to appreciate. When it is in a bearish state, it is likely to depreciate.
This metric also has the habit of acting like a level of price support in a bull market and a level of price resistance in a bear market.
The fact that Sunrun stock found support on this metric suggests that, even though the stock price was correcting, the correction was in the context of a bullish trend because it has always maintained its bullish stature.
This is exciting news, because the indications on the following chart are suggesting that RUN stock is all set to embark on its next leg toward higher prices.
Chart courtesy of StockCharts.com
The chart above has been subdivided into two distinct waves.
The wave highlighted in green is an impulse wave. Impulse waves capture the stage in a bullish trend when a stock makes a continuous move toward higher prices.
The wave highlighted in purple is a consolidation wave. Consolidation waves capture the stage in a bullish trend when a stock sells off and corrects.
These waves work together, creating the building blocks so a bullish trend can remain sustainable.
The Sunrun stock chart above illustrates that a consolidation wave has just been completed and a new impulse wave has begun to develop in its place.
Before I get ahead of myself, the moving average convergence/divergence (MACD) indicator located in the lower panel still needs to confirm this development.
MACD is an indicator that distinguishes whether bullish or bearish momentum is impacting the price action in a stock. A bullish MACD signal implies that bullish momentum is influencing the price action in a stock. A bearish MACD signal implies the complete opposite.
MACD is a very influential indicator because a stock cannot sustain a continuous move in either direction unless the applicable level of momentum is supporting it. This is why impulse waves have coincided with bullish MACD signals and consolidation waves have coincided with bearish MACD signals.
Once a bullish MACD signal is generated, I will have all the necessary signals required to suggest that higher RUN stock prices, via an impulse wave, are in development.
I am bullish on Sunrun stock because a number of technical indications are suggesting that the stock is in a bullish state and is, therefore, likely to appreciate.
I am waiting for one more signal to confirm that RUN stock has commenced the next leg of its bull market.