In the aftermath of the Boeing 737 Max 8 issues, I was looking around the industry to see charts that might be affected by the subsequent grounding of the aircraft. Last week, a beautiful breakout occurred on CAE Systems (CAE), which makes flight simulators to train pilots on. The company has a long history of working with aircraft manufacturers to help them train the pilots who will be flying the planes.
This chart has a number of nice features. The stock has been trending up nicely for the last few years and has been consolidating since June 2018, but it now seems to have left all that base behind. The SCTR ranking in the top is a relative strength ranking; CAE has become a top-performing mid-cap stock by staying above 50% on the SCTR almost all the time. Very consistently, the stock continues to make gains for shareholders. The volume on the breakout last week was particularly impressive. While the PPO is currently quite high, the stock has a strong history of high momentum readings.
All of these conditions suggest this stock has more room to run. I would place a stop just above the breakout level and try to move it up as soon as possible, following the price higher.
For those looking for some strong stocks in the current market, CAE is just breaking out, rather than being fully extended already.
Good trading,
Greg Schnell, CMT, MFTA
