Rite Aid Corporation (NYSE:RAD) – Major Support Around $6.50

Rite Aid Corporation (NYSE:RAD) has been falling gradually over the last few days, which can be considered as a normal correction only till now. The February sales results for the company have come out well enough. A higher prescription count at the comparable stores is visible along with an increase in front end and pharmacy comparable store sales, which helped the general figure to rise by 3.3%.

Technical analyst have identified strong buy signals in RAD.

Rite Aid Corporation (NYSE:RAD) is also helped by a flurry of upgrades by the analysts of various houses. Last week, the stock was upgraded to a “buy” rating from “neutral” by Vetr. Before that, Evercore ISI, JP Morgan Chase & Co. and Credit Suisse raised their ratings in the last two months. The targets of all those reports show a consensus in the band of $9-$10.

RAD

The technical picture supports the bullish view till now, though some more weakness in the short term can’t be discarded. The last intermediate rise from the 2014 October bottom has been contained in a perfect channel and the current correction has taken the price to the lower boundary of that channel. A bounce now would imply a new high for the stock immediately, but a break below the channel may extend the corrective period some more and a test of the $6.50-70 levels can be expected in that case.

The area of $6.50-70 is a very important historical support as both the 2003 and 2007 tops were made in that region. It is a classic example of a resistance turning support later. Whenever the uptrend resumes, a good amount of supply may be expected from $10 levels, which can be taken as a nice profit booking area for the investors.

The investors eager for an entry may wait for a return of the price above the 50 Day moving average, coming at $7.68 for now.

About the Author

Barry is a senior journalist at Us Markets Daily. He reports, shoots and edits many of his own stories by himself.

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