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Unusual Pattern of the Day: L.B. Foster Company (FSTR)

Unusual Pattern of the Day: L.B. Foster Company (FSTR)

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  • L.B. Foster Company (FSTR) may not be a household name. But the supplier to the railroad industry is starting to look attractive as rail traffic reaches pre-pandemic levels.

    That should help the company, which has dropped nearly 27 percent in the past year, head higher to move closer in line to the average stock.

    That’s also borne out by a bullish reading in the company’s chart. That reading? A golden cross. That’s where the company’s 50-day moving average has crossed above the 200-day moving average. It’s a bullish sign that the recent uptrend in shares will continue. Shares also have a neutral reading in terms of relative strength, so the company has a way to go before the shares get overbought.

    Action to take: The uptrend has been a somewhat weak one, but it’s still there. Investors may be interested in the company up to $15 per share, looking to take profits around $20 or so in the next few months. That would be near the company’s old 52-week high.

    But for a gradual uptrend, traders can buy the February 2021 $15 calls. These options are right at-the-money, and have a bid/ask spread around $2.00 right now. The open interest on the option isn’t huge, so traders should use a limit order and look for a quick, mid-double-digit profit.

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