The Developing Year-Long Base Formation Anticipates RH Upgrade to GS Conviction Buy List

Yesterday's (Aug 18) Goldman Sachs (GS) Research upgrade has goosed the stock by nearly 10% this morning, which also propels Restoration Hardware Holdings, Inc. (RH) above June-August resistance at 32.00, and unleashes the upside potential to 36.30/60 and to 39.00-40.00 implicit in the combustion out of its multi-month base formation.

While RH is considered to be a takeover target, the GS upgrade certainly caught short-sellers by surprise, and likely increases speculation about potential M&A activity in the near future.

GS research lifts the RH brand out of the dungeon, and breathes new life into the name. I remain long at 31.01 for The Model Portfolio.