For technical investors, finding stocks that are in a solid uptrend and ready for their next move is a key method. One way to do this is by looking for stocks that join good technical condition with a sound consolidation pattern, indicating a possible breakout. This method uses two specific measures: the ChartMill Technical Rating, which measures the general condition and trend of a stock, and the ChartMill Setup Quality Rating, which evaluates the state of its present price consolidation. A stock with high marks in both areas makes a strong argument for a technical setup, where the force of a good trend meets the chance of a clear entry point.
BRISTOL-MYERS SQUIBB CO (NYSE:BMY) is now on such a scan, showing traits that frequently come before notable price moves. The pharmaceutical company’s chart indicates it could be preparing to extend its recent upward move, giving a planned chance for traders watching price action.
Evaluating the Technical Base
The first part of this method is a good technical rating, which confirms the stock is in a sound, steady uptrend instead of just a short-lived rise. Bristol-Myers Squibb gets a Technical Rating of 8 out of 10, showing a positive technical condition. This score comes from several main points in its detailed technical report:
- Trend Direction: Both the long-term and short-term trends for BMY are marked as positive. This agreement across periods is a clear sign of continued buying interest and lowers the chance of opposing moves.
- Moving Average Position: The stock is priced above its important moving averages (20, 50, 100, and 200-day), and all these averages are increasing. This ordered, positive position works as a set of changing support levels.
- Good Performance: The stock’s results over the last three and six months have been good, at about 20.6% and 25.6% in turn, much better than its smaller one-year gain.
A high technical rating is important because it selects for market leaders and stocks with institutional interest. Buying a stock with a worsening technical condition is naturally more risky, even if it seems low-priced. BMY’s rating verifies it is acting from a condition of force within the wider market.
The State of the Present Setup
While a good trend is needed, it is not enough for a best entry. A stock that has risen sharply may be stretched and ready for a decline. This is where the Setup Quality Rating is key, finding times of consolidation or "tight" trading inside the larger trend. BMY has a Setup Rating of 9, pointing out a sound pattern.
The study indicates a consolidation period that has made a clear trading range and lower volatility:
- Consolidation Range: In the last month, BMY has traded between $52.06 and $57.04. It is now placed in the middle of this range, suggesting it has taken in selling and is pausing before a possible next move.
- Clear Support and Resistance: The setup finds a close support area between $54.64 and $55.50, made by a meeting of trendlines and moving averages. Above, resistance is fairly open, with the next notable level seen near $61.10. This gives a clear plan for risk.
- Lower Volatility: The consolidation has caused a drop in daily price changes, a usual trait before volatility grows, which often comes with a breakout.
This high setup score addresses the important question of "when" to think about a position. It indicates the stock is not over-purchased but is instead pausing, giving a possible entry point with a close, reasonable area to set a protective stop-loss order.
A Clear Technical Situation
From this joined study, a specific technical situation is shown. The proposed setup includes an entry on a breakout above the recent range high at $57.05, with a stop-loss set just below the found support area at $54.63. This sets the trade's risk at about 4.2% on the position.
- Entry: A buy stop order at $57.05 (above the 10-day high).
- Stop-Loss: A sell stop order at $54.63 (below the support area).
- Risk Management: The set risk is 2.42 points, or 4.24% of the entry price.
It is important to see this is an automatically made example based only on technical levels. Traders should always change such details to match their own risk comfort and general method. Also, fundamental events like coming earnings or drug trial results must be thought about, as they can quickly change any technical pattern.
Locating Like Chances
Bristol-Myers Squibb shows the kind of chance technical breakout scans are made to find. For investors wanting to see a new list of stocks that fit similar conditions of good technicals and sound setups, new choices are found each day. You can view the present market chances using the Technical Breakout Setups screen.
Disclaimer: This article is for information only and is not investment advice, a suggestion, or an offer to buy or sell any security. The study is based on technical data and automated scoring models. Investing includes risk, including the possible loss of principal. Always do your own research and think about your financial position and risk comfort before making any investment choices.
