Eastman’s bull market is nearing full bloom

Risk/Reward Rating: Positive

This is a brief update on Eastman Chemical (NYSE:EMN) which was covered in the September 6, 2022 report, “Eastman Chemical is entering a bull market.” Since then, Eastman’s share price has followed the bullish notes exactly as written in the report:

While the current retest of recent lows near $85 may fail to hold given the current bear market in stocks broadly, the downside appears to be well contained… While I expect exceptionally strong support near $80, there is additional technical downside potential to the $70 range.

Technicals

The following 6-month daily chart captures the price action following the September report. Please note that the green lines represent key support levels, and the orange line is the beginning of a resistance zone that spans from $90 to $130 at roughly $10 intervals.

Eastman Chemical 6-month daily chart. Created by Brian Kapp using a chart from Barchart.com

Following the September 6 report, notice that Eastman traded precisely to the lower support level at $70. Importantly, after rallying to $90 in early November, the shares consolidated sideways and found strong support at the $80 upper support level.

This week, Eastman made its first attempt to breakout above the first resistance level near $90 (the orange line). The following 1-year daily chart provides a larger perspective of the cup and handle bottom formation that has formed since September and the initial breakout attempt displayed above.

Eastman Chemical 1-year daily chart. Created by Brian Kapp using a chart from Barchart.com

Note that the grey line is the 200-period moving average and the gold line is the 50-period moving average. In the above charts, the period is days. With the shares breaching the 200-day moving average from below, one would expect some resistance to the breakout attempt.