5 Big Stock Charts You Need to See
BALTIMORE ( Stockpickr) -- Even though Mr. Market is continuing to take a breather this week, not all stocks are following suit. That's especially true in the big names, where trading volume is the strongest; there certainly are still some attractive trades popping up in this market.
That's why, today, we're taking a technical look at the price setups forming in five of the biggest names on Wall Street.
If you're new to technical analysis , here's the executive summary.
Technicals are a study of the market itself. Since the market is ultimately the only mechanism that determines a stock's price, technical analysis is a valuable tool even in the roughest of trading conditions.
Technical charts are used every day by proprietary trading floors, Wall Street's biggest financial firms, and individual investors to get an edge on the market. And research shows that skilled technical traders can bank gains as much as 90% of the time.
Every week, I take an in-depth look at big names that are telling important technical stories. Here's this week's look at the charts of five high-volume stocks to trade for gains .
>>5 Stocks Set to Soar on Bullish Earnings Estee Lauder
It's been a ho-hum year for cosmetics company Estee Lauder (EL) ; shares of the $24 billion firm have only moved around 4% higher since the first trading day of 2013. But EL could be in store for considerable upside thanks to the long-term pattern that's been forming in shares.
Lauder is currently forming an ascending triangle pattern, a trading setup that's formed by a horizontal resistance level to the upside and uptrending support put in below shares. Essentially, as EL bounces in between those two technically significant price levels, it's getting squeezed closer and closer to a breakout above that resistance level at $64. When the breakout happens, we've got a buy signal on our hands.
Momentum adds some extra confirmation to the upside setup in EL. That's because 14-day RSI has been able to maintain an uptrend over the course of the pattern, a sign that Lauder's price increase is accelerating. Since momentum is a leading indicator of price, that's a very auspicious sign for shareholders.
Wait for the breakout before putting your cash on the line in EL. Wal-Mart
We're seeing the opposite pattern in retail behemoth Wal-Mart (WMT) right now. WMT is currently forming a descending triangle, and as the name implies, it's the bearish inverse of an ascending triangle. In this case, we've got a horizontal support level at $68 and downtrending resistance above shares.
The trading signal is exactly the opposite in this stock; Wal-Mart will have to push through its horizontal support level before it triggers a sell signal.