Why Dean Food Could Rally 17% In The Near Future

Dean Foods (DF) has rebounded from a 4 year downtrend beginning in 2007 when the stock was at an all-time high of $37.48. Through 2011 DF has lost ~82% of its value for shareholders hitting a low of $7.13. Since then, DF has reversed some of this damage and begun a new uptrend making higher highs and higher lows until recently when prices stalled out at $19.10.

The weekly chart below shows a large ascending triangle formation with resistance around $19. Prices have managed to regain the 200 SMA, and posted a very bullish golden cross in October 2012. The MACD is showing some bearish divergence, but is still printing above the zero line which is bullish as well. Should prices breakout of the $19 resistance, $22 is the next weekly resistance representing a ~17% upside.

The daily chart shows a similar story with $19 acting as multi-month resistance beginning in late October of 2012. Since then prices have traded in a range between the $19 resistance and $15 support. With the S&P 500 making new highs today, 4/10/13, the chances are that DF will see some momentum and make another run towards the $19 area. Keep Dean Foods on your radar for a breakout to $22 for a chance at a 17% return.