Pay Attention To These Stock Patterns Playing Out
There are price patterns playing out in the four stocks
below. Each stock is near support or resistance levels, that if broken
could lead to significant price moves. These stocks have already
experienced volatility recently, so another breakout could see that
continue.
The Bank of New York Mellon Corporation (BK) rallied aggressively off the August 24 low of $36.46, to a November 6 high of $44.73. That swing high comes in just below the 52-week high of $45.45 set on August 10. Since the November 6 high the price pulled back to a swing low of $42.34 on November 16, creating a pennant-like formation. More aggressive traders will be trading a breakout above $44.10, while more conservative traders may wish to see the pattern develop for another week or more and then buy on a breakout above $44.73. The breakout above $44.73 gives a target estimate of $47.10 to $47.50, based on the trajectory of the longer-term uptrend. A downside breakout warns of a decline to $40 to $39, which is a support area from late September and early October.
LinkedIn Corporation (LNKD) gapped higher on October 30. Since then the stock is moving in a triangle or pennant pattern. This is another stock where it may be worthwhile to wait a week for the pattern to become more defined. If the price continues to move between the October 30 low at $236 and November 12 high at $258.39 over the next week, watch for a breakout below or above those levels. More aggressive traders can draw trendlines on the price action right now to see breakout levels near $255 on the upside and $240.50 on the downside. If the price breaks lower the initial target is $118. The target is based on the height of the pattern, and $118 is also close to where the price gapped from on October 30. If the price breaks to the upside, the target is $277 to $280, just above the current 52-week high of $276.18.
McCormick & Company, Incorporated (MKC) was a steady climber all year. It has even been resilient since the August sell-off, where it fell from a high of $85.30 to a low of $75.68 on August 24. Since the low the price has recovered, reaching a fresh high of $86.21 on November 5. While the November high was slightly above the August high, the price hasn't definitively broken into new price territory. In August, October and now November the price has stalled in this $85 to $86.21 region, creating a resistance zone. The price needs to clearly break this area, preferably with a closing price above $86.50. That would indicate the long-term uptrend is still underway, and provides a target of $90 based on the trends trajectory.
A look at the 2015 chart of 21Vianet Group, Inc. (VNET) shows it is prone to sharp volatile moves. In 2014 the stock peaked at $32.34 before collapsing to a low of $14.23. The stock could be setting up for another big move. Since October 10 the stock has drifted in a tight descending channel. Based on the history of volatility this quiet period isn't likely to last. On November 20 the price did break the channel to the upside, with a move above $20. With a stop loss below $19.50 the price could run into the $21.50 area before it hits resistance. The next resistance isn't until $22.40 to $22.86 (the 2015 high). A drop back below $19.45 warns the upside breakout was false, and that the price could fall toward support at $16.50 to $16. The yearly low, or bottom fo the range, is $15.03.
The Bank of New York Mellon Corporation (BK) rallied aggressively off the August 24 low of $36.46, to a November 6 high of $44.73. That swing high comes in just below the 52-week high of $45.45 set on August 10. Since the November 6 high the price pulled back to a swing low of $42.34 on November 16, creating a pennant-like formation. More aggressive traders will be trading a breakout above $44.10, while more conservative traders may wish to see the pattern develop for another week or more and then buy on a breakout above $44.73. The breakout above $44.73 gives a target estimate of $47.10 to $47.50, based on the trajectory of the longer-term uptrend. A downside breakout warns of a decline to $40 to $39, which is a support area from late September and early October.
LinkedIn Corporation (LNKD) gapped higher on October 30. Since then the stock is moving in a triangle or pennant pattern. This is another stock where it may be worthwhile to wait a week for the pattern to become more defined. If the price continues to move between the October 30 low at $236 and November 12 high at $258.39 over the next week, watch for a breakout below or above those levels. More aggressive traders can draw trendlines on the price action right now to see breakout levels near $255 on the upside and $240.50 on the downside. If the price breaks lower the initial target is $118. The target is based on the height of the pattern, and $118 is also close to where the price gapped from on October 30. If the price breaks to the upside, the target is $277 to $280, just above the current 52-week high of $276.18.
McCormick & Company, Incorporated (MKC) was a steady climber all year. It has even been resilient since the August sell-off, where it fell from a high of $85.30 to a low of $75.68 on August 24. Since the low the price has recovered, reaching a fresh high of $86.21 on November 5. While the November high was slightly above the August high, the price hasn't definitively broken into new price territory. In August, October and now November the price has stalled in this $85 to $86.21 region, creating a resistance zone. The price needs to clearly break this area, preferably with a closing price above $86.50. That would indicate the long-term uptrend is still underway, and provides a target of $90 based on the trends trajectory.
A look at the 2015 chart of 21Vianet Group, Inc. (VNET) shows it is prone to sharp volatile moves. In 2014 the stock peaked at $32.34 before collapsing to a low of $14.23. The stock could be setting up for another big move. Since October 10 the stock has drifted in a tight descending channel. Based on the history of volatility this quiet period isn't likely to last. On November 20 the price did break the channel to the upside, with a move above $20. With a stop loss below $19.50 the price could run into the $21.50 area before it hits resistance. The next resistance isn't until $22.40 to $22.86 (the 2015 high). A drop back below $19.45 warns the upside breakout was false, and that the price could fall toward support at $16.50 to $16. The yearly low, or bottom fo the range, is $15.03.
The Bottom Line
These stocks are worth watching for a breakout. In the case of 21Vianet a breakout has already occurred. McCormick is close to a major resistance level, and LinkedIn and Bank of New York Mellon are moving in small patterns but breakouts could still result in significant price moves. For these latter two stocks a bit of patience may pay off, allowing the pattern to more fully form. The downside is that waiting means sometimes missing opportunities. Only take trades that align with your strategy, that fit your risk tolerance and only risk a small percentage of account capital on any single trade.Get Out of Debt – Start Making Money
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