Channeling Stocks to Watch – Spot the Box

Here are two channeling stocks to put on your watch list and if nothing else paper trade. This blog will be brief, see the previous blog “channeling stocks” to obtain a more in depth understanding of this analysis.

Baker Hughes “BHI” is providing a $5.00 channeling range trade opportunity. So far this stock has given two complete revolutions and is setting up for a third if we get a bounce off of support.

One thing to note about the chart on the days to “buy,” look to buy on a bounce off of support (i.e. a positive/green/up day) because at some point the pattern will break down. The bounce off of support is your first indicator that the pattern is looking to continue, nothing is guaranteed in the market and no one wants to catch a falling knife. Be smart, use the bounce off of support as an entry and a frame for being wrong and knowing when to exit the trade (i.e. the stock turns around and trades below the bounce).

The same analysis applies for selling.  You should look to sell on the first down day of tagging the upper support line.

Here is the second one as promised SM Energy Company “SM”. This one offers a nice $10 trading range.

I’ll also leave you with some homework. What confirming pattern do you see in the Stochastics “StochD” indicator when channeling stocks reach their support and resistance level?

Figure this one out and you’re well on your way to moving out of the beginners club. The key to technical analysis is not only knowing how to read technicals but knowing which indicators apply to certain stock behaviors.

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