Chart analyst David Keller breaks down a bullish chart formation on this PE stock.
After completing a classic "bull flag" chart pattern this week, shares of Blackstone Group should be poised to experience much stronger gains in the weeks to come. With improving momentum characteristics and relative strength, along with a bullish moving average configuration, it appears that BX is resuming a primary uptrend phase.
Blackstone first popped up on our radar back in July, when the stock completed an inverted head and shoulders bottoming pattern. Soon after, the price pushed back above the 200-day moving average, completing a clear bullish rotation. But starting in July, BX began a short-term downtrend formed by a parallel channel of lower highs and lower lows. This bull flag pattern can be considered completed only if the price pushes above the upper trendline resistance. This week, BX has confirmed the upside breakout as the price broke above $180 for the first time since January. The price is now in a clear bullish structure, supported by encouraging momentum readings with the RSI well above the 60 level. In terms of potential resistance, we're noting the previous all-time high from November around $200. Let's review some of the conditions that give us confidence that this recent breakout could lead to much further gains. We'd like to see improved volume readings through the month of September, which would indicate an influx of buying power. The accumulation-distribution line has been trending higher in recent weeks, but the Chaikin Money Flow remains just below the zero level. If the accumulation-distribution continues its upward swing, and the Chaikin Money Flow pushes above the zero level for the first time since early August, that would indicate strong volume support for the recent breakout. The really encouraging story from a technical perspective is best shown on the monthly chart. Going back to the 2009 market low, Blackstone has been in a secular uptrend phase. And while the history of BX has been marked by major drawdowns along the way, they have all remained above the 60-month moving average. The monthly PPO indicator is close to generating a bullish crossover. We've noted previous bullish crossovers with vertical green lines, helping us recognize that these indications often lead to sustained gains for months and months going forward. Given Blackstone's recent chart pattern breakout, combined with the bullish secular trend structure, we could see much further upside in store for this asset manager. David Keller, CMT marketmisbehavior.com DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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