Generac Recharges For Another Run Higher: What's Next?

Generac Holdings Inc. GNRC gapped up over 2% higher on Monday following an eight-day rally that brought the stock from a low of $385 to an all-time high of $458.10.

The power generation equipment and energy storage systems manufacturer debuted on the New York Stock Exchange on Feb. 11 at a price of $293.50.

The stock has been able to make massive gains quickly partly due to its underlying statistics.

Although only 1.66% of the company’s shares are held short, there are only 62.12 shares available for trading and institutions and insiders have locked up a whopping 94.08% of the float with institutions owning the bulk of it at 92.50%.

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The Generac Chart: When Generac hit the $458 area on Monday morning and was unable to trade above it, a bearish double top pattern was created when combined with the stock hitting the same level on July 26.

Sellers then came in and dropped Generac down to fill the gap and the stock then began to trade sideways in consolidation on smaller timeframes.

There is another gap left behind between $331 and $339 levels. Although the range is about 25% below where Generac is currently trading, it is likely the stock will trade down to fill the gap at some point in the future as gaps fill 90% of the time.

Monday’s consolidation helped to cool down Generac’s relative strength index (RSI) which was approaching 70%. When a stock’s RSI reaches over the 70% level it enters overbought territory which is a sell signal for technical traders.

Generac is trading above the eight-day and 21-day exponential moving averages (EMA) and the eight-day EMA recently crossed above the 21-day, both of which are bullish indicators. The stock is also trading above the 200-day simple moving average which indicates overall sentiment in the Generac is bullish.

• Bulls want to see continued consolidation, and then for big bullish volume to come in and drive Generac’s stock up above resistance at its previous all-time high. If Generac can make a new all-time high with high volume, there is no further resistance above in the form of price history.
• Bears want to see sustained bearish volume continue to drive Generac’s stock down under support at the $440 level. If the stock loses the area as support, it could retest lower support at $406.

Photo: Riccardo Annandale via Unsplash