For technical investors, finding stocks that are in a solid uptrend and ready for their next advance is a main goal. One organized way to do this uses a breakout strategy that selects for two specific scores: a high Technical Rating, which verifies the stock's basic strength and direction, and a high Setup Quality Rating, which points to a pause pattern giving a distinct, manageable entry point. This process tries to find stocks as they leave a quiet phase, possibly marking the start of a new upward phase.
BALL CORP (NYSE:BALL), a top supplier of aluminum packaging, now offers a strong example for this breakout approach. A look at its technical analysis report shows it gets a near-perfect 9 on both the Technical and Setup Quality ratings, meaning it fits the strict requirements for a possible breakout candidate.
Technical Strength: The Base for an Advance
The Chartmill Technical Rating measures the total condition and direction of a stock. A high score, usually 7 or more, is vital for a breakout strategy because it makes sure an investor is moving with the current market force instead of opposing it. For BALL, a rating of 9 highlights notable technical strength, formed on several important parts:
- Trend Agreement: Both the recent and longer-term trends for BALL are seen as positive. This agreement across periods is a strong sign of continued buying interest and lowers the chance of a quick trend change.
- Industry Performance: The stock is doing better than 76% of similar companies in the Containers & Packaging industry. Comparative strength is a key part of the Technical Rating, as it finds market leaders that frequently keep leading.
- Price Level vs. Moving Averages: The stock is priced above all its main simple moving averages (20, 50, 100, and 200-day), and each of these averages is also in a rising pattern. This layered, positive arrangement of support levels is a standard sign of a solid uptrend.
- Nearness to Highs: BALL is trading close to its 52-week high of $68.29. While this can at times suggest a "crowded" state, within the setting of a high technical rating, it more commonly shows a stock with steady demand and little resistance above.
This solid technical background gives the needed base. A breakout from a weak stock is often a misleading signal, but a breakout from a stock with a high Technical Rating has much more importance, as the basic trend is already clearly in place.
Setup Quality: Finding the Best Entry Chance
While a solid trend is needed, it is not enough for a well-timed entry. The Chartmill Setup Quality Rating deals with the "when" by finding times of pause or narrow trading areas. A high Setup Rating, like BALL's score of 9, implies the stock is tightening within a set area, which can come before a clear move. This pause allows for finding exact support and resistance levels, making a planned entry with a set risk level possible.
The technical report points out several parts adding to BALL's high setup score:
- Pause Pattern: The analysis states that BALL is now showing a "bull flag pattern," which is a short halt or slight drop within a solid uptrend. This is exactly the kind of helpful action the Setup Rating aims to find.
- Clear Support and Resistance: The report describes a definite support area between $65.37 and $66.62, made from a mix of moving averages and trendlines. Just above the present price, a resistance area exists between $67.29 and $67.76. These set limits create a practical plan for trade planning.
- Supportive Market Action: Recent signs show large investors showing interest in the stock, and a "Pocket Pivot" signal—a positive volume/price pattern—was seen lately. These are seen as extra points that add confidence to the setup's quality.
The mix of a narrow trading range near highs and clear, close support allows for suggesting a particular, rule-based trade setup. The automatic analysis proposes a possible entry on a breakout above the resistance at $67.77, with a stop loss set below the support area at $65.36. This would cap the calculated risk on the trade to about 3.6%.
A Candidate for the Watchlist
BALL CORP shows the kind of chance technical breakout screens are made to find. It has the two marks of a strong basic trend (Technical Rating of 9) and a helpful, practical pattern (Setup Quality Rating of 9). For investors using this method, it stands as a candidate deserving more attention, as it seems to be gathering force for a possible extension of its set uptrend.
It is key to recall that technical screens are beginning points for more study. Investors should always think about wider market states, industry factors, and basic news, like coming earnings reports, before making any investment choice.
Interested in finding more possible breakout setups like BALL? You can use the same screen applied to find this candidate and see the newest results each day by going to the Technical Breakout Setups page.
Disclaimer: This article is for information only and is not investment advice, a suggestion, or an offer or request to buy or sell any securities. The analysis and trade setup noted are from automatic technical models and should not be seen as a promise of future results. All investment choices include risk, and you should do your own study and talk with a qualified financial advisor before making any trading decisions.