TradingMarkets Chart of the Day
For today’s Chart of the Day, let’s look at the
Stocks Ready To Surge list published each day on the
Indicators
page. These are the stocks that today made new 10-day lows that are still
in an uptrend as they are trading above their 200-day
moving average.
TradingMarkets research has indicated that stocks that make new lows while
trading above their 200-day moving average have consistently performed well over
the next few days. The 200-day MA acts as support for price, often forcing
the stock to bounce back after an extended down move.
Colgate-Palmolive
(
CL |
Quote |
Chart |
News |
PowerRating)
made new 10-day lows on Friday, 08/04, pushing closer to the 200-day MA. Look
for CL to bounce back from these lows, as the daily chart shows us a nice
pullback pattern. CL closed near the top of its range on Friday as well, a
good sign that there are buyers in the market. As a general rule, look for
stocks to bounce that are trending upwards, and pullback to their MA’s to make
new lows.
Remember: Pullbacks are
one the best and easiest ways to trade. Why trade against a trending
stock? Wait for price to come down against the trade, and catch the
corrective move in the direction of the trend.