Technical breakout screens are a popular tool among traders who rely on chart patterns and momentum. The idea is straightforward: look for stocks that are not only in a strong technical uptrend but are also forming a consolidation pattern, suggesting they are coiling up for a potential breakout. By combining a high Chartmill Technical Rating, which measures the overall health of the trend, with a high Setup Quality Score, which identifies tight price action near support, you can narrow down candidates that offer both direction and favorable entry points. In today’s scan, Aflac Inc (NYSE:AFL) emerged as a standout candidate meeting both of these critical criteria.
Recent Performance
Aflac has been displaying solid price action across multiple timeframes. The stock is currently trading near the upper end of its 52-week range at $116.21, with a 52-week high of $119.32. Over the past month, it has gained approximately 5.9%, while its three-month performance sits at a positive 4.7%. Over the past six months and twelve months, returns stand at 8.4% and 10.1%, respectively. This shows a steady, gradual uptrend rather than a sudden spike.
Volume is also supportive: the 50-day average volume is around 2.29 million shares per day, which provides sufficient liquidity for traders looking to enter or exit positions without significant slippage. The S&P 500 is currently in a positive short-term and long-term trend, and Aflac is generally keeping pace with the market, though it lags slightly given that the index is trading near new highs.
Technical Strength (Chartmill Technical Rating)
The first pillar of our breakout screen is a strong Chartmill Technical Rating, and Aflac scores an 8 out of 10 on this metric. According to Aflac's technical analysis report, this rating reflects a stock that is in a healthy uptrend across both short and long timeframes. Both the short-term and long-term trends are marked as positive, which is a critical requirement for the breakout strategy. A stock in a downtrend would require a trend reversal, which carries higher risk; by focusing on stocks with an existing uptrend, the method aims to ride the momentum rather than fight it.
The supporting details show that all four key moving averages—20-day SMA ($113.26), 50-day SMA ($111.42), 100-day SMA ($111.11), and 200-day SMA ($109.35)—are rising. Being priced above all of these moving averages is a strong bullish signal. Additionally, Aflac is trading in the upper part of its 52-week range, although it lags the S&P500 slightly, which is noted as a neutral factor rather than a negative one. It is also worth noting that Aflac outperforms 78% of the 148 stocks in its Insurance industry, placing it among the leaders in its sector.
Setup Quality (Setup Rating)
The second pillar—and arguably the more actionable one for timing entries—is the Setup Quality Score. Aflac also scores an 8 out of 10 here. This is particularly important because a high technical rating alone does not guarantee a good entry point. A stock that has already rallied significantly may be extended, leaving little room for a favorable risk/reward ratio. The setup score addresses this by identifying periods of consolidation where the stock is trading in a narrow range, reducing volatility and forming a clear support zone.
Based on the technical report, the recent price action shows a consolidation pattern. A support zone has been identified between $111.42 and $115.26, which is formed by a combination of trend lines and moving averages. Right above the current price sits a resistance zone between $117.15 and $117.47. The suggested trade setup in the report recommends a buy stop order at $117.48—just above that resistance—with a stop loss placed at $112.20, which is below the 10-day low. This gives a defined risk of about 4.5% and allows for a relatively tight stop, which is the hallmark of a high-quality setup. This is exactly the kind of pattern the breakout screen is designed to catch: a stock ready to emerge from its base and continue the uptrend.
Screening Signal
The technical breakout screen that identified Aflac filters for stocks with a Chartmill Setup Quality above 7 and a Technical Rating of 7 or higher, along with sufficient average true range (ATR) to ensure the stock is still moving. Aflac not only meets but exceeds these thresholds, making it a top candidate among the current scan results. With an ATR percentage of 1.71%, the stock has enough price movement to be tradeable without being excessively volatile.
If you'd like to explore more stocks that show similar breakout patterns, you can run the same screen yourself and customize the filters to your preference. View the full Technical Breakout Setups screen for daily updated results.
Disclaimer
This article is for informational and educational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always conduct your own research and consider your risk tolerance before making any trading decisions.