As my colleague John Jagerson noted last week, brokerage stocks are red-hot right now in the face of rising interest rates. The Sector Charting tool of my Trending123 service confirms that upside, showing 73.97% upside in the sector from its 52-week lows and a -5.77% drop from the 52-week highs — which could just be the perfect recipe for buying the dip in brokerages, a sector showing good long-term strength.
The stock has developed an upside breakout pattern over the past 72 days, which opens up the possibility of a bullish intermediate-term trade (six weeks to nine months) if the pattern is confirmed.
The upside breakout pattern represents a trading range in which prices move sideways between two parallel horizontal lines. It’s often a pause or congestion area within an existing trend though sometimes the breakout results in a reversal to the prior trend. Either way, an upside breakout through the upper resistance line signals an end to the consolidation period and the start of an uptrend.
The “narrowness” of the trading range can also be used to gauge the breakout. To determine the narrowness of the trading range compare the upper boundary with the lower boundary of the trading range. If the trading range has a small difference between the upper and lower boundary (making it narrow) then the breakout is considered stronger and more reliable.
Target Price: $86.00 – $87.50
InvestorPlace advisor John Lansing tracks the charts all day and offers expert technical analysis in his day trading, options and trading services: Power Trading at the Open, Parabolic Options and Trending123. Trending123 members receive access to the Trending123 Pattern Scan powered by Recognia free as part of their membership.