Conclusion, Investment Implications, Strategy
Materials Sector stock Huntsman Corporation (HUN) is currently testing major underlying support near $32.78 amid monthly oversold conditions, setting up a potential low risk buying opportunity within a sector that is likely to be positively affected by current inflationary pressures. A sustained rise above the $32.86 area would target a 21% rise to $41.65. This is an Asbury Value idea.
Analysis and Rationale
Huntsman Corporation (HUN) manufactures and sells differentiated organic chemical products worldwide. The company operates through four segments: Polyurethanes, Performance Products, Advanced Materials, and Textile Effects. The company’s products are used in a range of applications, including adhesives, aerospace, automotive, construction products, durable and non-durable consumer products, electronics, insulation, medical, packaging, coatings and construction, power generation, refining, synthetic fiber, textile chemicals, and dye industries. Huntsman Corporation was founded in 1970 and is headquartered in The Woodlands, Texas.
The upper panel of Chart 1 below plots HUN daily since July 2021 along with its 200-day moving average, a widely-watched major trend proxy currently at $32.78 which the stock is currently testing as major underlying support. The lower panel plots monthly overbought/oversold conditions according to the 21-day (monthly) Stochastic oscillator. The green highlights show that PINC is currently rising out of monthly oversold extremes, and that previous instances of this coincided with Tactical bottoms on Mar 9th, and in December and August of last year.
These conditions suggest another similar low-risk buying opportunity now.
Risk/Reward
Table 1 below shows that considering a $41.65 upside target with a protective stop placed below the $32.86 area, a long entry price of $34.50 would provide a 1:4.4 risk/reward ratio (risking $1.00 to make $4.40) with an initial risk of 4.8%.
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Please consult the table showing our Asbury 6 key market metrics to help determine if this investment is suitable for you.