Tyson Foods Inc. is moving well this morning. The stock’s 5% gain puts it at the top of the S&P 500 gainers list. It appears a breakout is brewing after months of consolidation. TSN remains range bound, but a move, maybe a significant one, may be about to begin.
TSN has been trading in a tight range since mid April. Unlike the bulk of the S&P 500 Index the stock’s rebound off the March lows has been quite subdued. As summer as dragged on TSN’s range as tightened as it sat nearly 35% below the 2020 peak. This sideways action has kept shares well below overbought levels(daily MACD) indicating a fresh rally leg could carry the stock sharply higher.
We believe TSN is set up as a low risk buy at current levels. A key hurdle is an overhead trend line that links the June/August highs. Once clear the stock will have to battle a downward sloping 200D moving average($69). This key level may not pose a problem due to the length and narrowness of the current consolidation. On the downside, a close back below $60.00 would violate the September lows indicating more sideways action will be needed before TSN can mount a measurable rally.