Whether it's because they are being used to store oil out at sea or move stuff around the globe, container ships are a hot topic. But they are also making for hot stocks. Last week Nordic American Tankers Limited (NYSE:NAT) -- a premium Top-10 pick -- rose over 10% and is still going. But this blog is not about what happened, rather about what could be. And there is another container ship stock ready to break out to the upside.
The chart of Danaos Corporation (NYSE:DAC) above tells the story. The area from 6.22 to 6.45 has been important as resistance since last April. And now after making a low in October it is addressing that resistance for the 4th time -- each time for a higher low. That creates an ascending triangle pattern, which for technicians, points to a move to 8.90 if the price moves above it to the upside.
The momentum indicators are mixed currently. The RSI is bullish and rising, supporting a break higher. But the MACD is not as bullish. It has pulled back in a shallow arc and is starting to turn higher. If it should cross the trigger line, then it too would be bullish. The Bollinger Bands® have squeezed, which is often a precursor to a move, so the timing may be right as well.
Look for a break over 6.45 to ride the high seas in this stock.