J.B. Hunt Transport Services, Inc. (JBHT) has missed earnings estimates for three consecutive quarters, but the stock has been on the rise since trading as low as $75.29 on March 16. The stock closed last week above its 200-day simple moving average at $106.90. This is a solid bull market run.

Shares of the trucker ended last week at $107.58, down 7.9% year to date but in bull market territory at 42.9% above the March 16 low of $75.29. The stock is also in correction territory at 11% below its all-time intraday high of $120.84 set on Jan. 16. J.B. Hunt stock is reasonably priced with a P/E ratio of 20.34 with a dividend yield of 1.04%, according to Macrotrends.

The daily chart for J.B. Hunt

Daily chart showing the share price performance of J.B. Hunt Transport Services, Inc. (JBHT)
Refinitiv XENITH

The daily chart for J.B. Hunt shows the bull market run since March 16. This is a consolidation of a bear market decline of 38% from its all-time high of $122.29 set on Nov. 7 to its March 16 low of $75.29.

The stock confirmed a "golden cross" on Sept. 9, 2019, when the 50-day simple moving average rose above the 200-day simple moving average to signal that higher prices would follow. This tracked the stock to its all-time high.

So far in 2020, the stock has been below its semiannual and annual risky levels at $131.96 and $140.10, respectively. The stock has been below its 50-day simple moving average since Feb. 13 and failed to hold its 200-day simple moving average on Feb. 24, which negated the "golden cross." This prompted the decline to the March 16 low.

On the rebound, the stock gapped above its second quarter pivot at $91.32 on April 6, which targeted the return to the 200-day simple moving average now at $106.90. The upside potential is to the stock's monthly risky level for April at $110.40.

The weekly chart for J.B. Hunt 

Weekly chart showing the share price performance of J.B. Hunt Transport Services, Inc. (JBHT)
Refinitiv XENITH

The weekly chart for J.B. Hunt is positive, with the stock above its five-week modified moving average at $98.27. The stock is above its 200-week simple moving average, or "reversion to the mean," at $103.18, which was crossed to the upside last week.

The 12 x 3 x 3 weekly slow stochastic reading rose to 36.61 last week, up from 27.29 on April 10. At the November high, this reading was above 90.00, putting the stock in an "inflating parabolic bubble" formation, and bubbles always pop.

Trading strategy: Buy J.B. Hunt stock on weakness to its 200-week simple moving average at $103.18 and to its quarterly value level at $91.32. Reduce holdings on strength to the monthly, semiannual, and annual risky levels at $110.40, $131.96, and $140.10, respectively.

How to use my value levels and risky levels: The stock's closing price on Dec. 31, 2019, was an input to my proprietary analytics. Semiannual and annual levels remain on the charts. Each calculation uses the last nine closes in these time horizons.

Second quarter 2020 and monthly levels for April were established based upon the closing price on March 31. New weekly levels are calculated after the end of each week, and new quarterly levels occur at the end of each quarter. Semiannual levels are updated at mid-year, while annual levels are in play all year long.

My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in. To capture share price volatility, investors should buy shares on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before their time horizon expires.

How to use 12 x 3 x 3 weekly slow stochastic readings: My choice of using 12 x 3 x 3 weekly slow stochastic readings was based upon backtesting many methods of reading share-price momentum with the objective of finding the combination that resulted in the fewest false signals. I did this following the stock market crash of 1987, so I have been happy with the results for more than 30 years.

The stochastic reading covers the last 12 weeks of highs, lows, and closes for the stock. There is a raw calculation of the differences between the highest high and lowest low versus the closes. These levels are modified to a fast reading and a slow reading, and I found that the slow reading worked the best.

The stochastic reading scales between 00.00 and 100.00, with readings above 80.00 considered overbought and readings below 20.00 considered oversold. A reading above 90.00 is considered an "inflating parabolic bubble" formation, which is typically followed by a decline of 10% to 20% over the next three to five months. A reading below 10.00 is considered "too cheap to ignore," which is typically followed by gains of 10% to 20% over the next three to five months.

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.