For investors who use charts and price action to guide their choices, a methodical way to find possible trades is important. One such technique looks for stocks that are both showing good technical condition and making a constructive price formation, often before a possible price surge. This method centers on two key proprietary measures from ChartMill: the Technical Rating, which judges the general condition and direction of a stock, and the Setup Quality Rating, which examines if the stock is consolidating in a manner that gives a clear, lower-risk entry point. By joining these scores, traders try to find chances in stocks that are pausing before their next possible upward move.
Church & Dwight Co Inc (NYSE:CHD) recently appeared from such a search, showing a profile that calls for more examination from a technical viewpoint. The household and personal care products company, known for brands like ARM & HAMMER and OxiClean, is now showing traits that match this price surge setup method.
Judging Technical Condition
The base of this method is a stock's fundamental technical condition, measured by ChartMill's Technical Rating. A high rating implies a stock is in a confirmed upward trend across several time periods, a requirement for viewing it as a leader. CHD gets a good rating of 8 out of 10, pointing to sound technical foundations.
A close look at the technical analysis report shows several supporting details:
- Trend Agreement: Both the near-term and longer-term trends for CHD are judged as positive. This agreement is a strong sign, implying momentum is continuing and not just a temporary rise.
- Moving Average Backing: The stock is trading above its important moving averages (20, 50, 100, and 200-day SMAs), and all these averages are in rising arrangements. This layered support formation is a typical sign of a sound upward trend.
- Relative Performance: While CHD's one-year performance is a little behind the wider market, its recent momentum is significant. The stock has recorded good increases over the last one and three-month periods, pointing to a recent quickening in buyer activity.
This mix of positive trends, rising moving averages, and bettering near-term momentum supports the high Technical Rating. For the price surge method, this means CHD is not a stock in a downward trend trying to turn around; it is an already-strong stock that might be getting ready for its next rise.
Examining the Setup Quality
A strong trend by itself is not a signal to buy. Entering a stock that has already made a big, prolonged move often results in buying at a high point. This is where the Setup Quality Rating becomes important. It finds times of consolidation or narrow trading ranges inside an upward trend, which can give better-probability entry points. CHD scores an 8 here too, indicating a high-grade setup.
The technical report points out the formation taking shape: a bull flag. This formation happens when a stock has a fast rise (the flagpole) followed by a small, downward-sloping consolidation (the flag). It is usually seen as a pause before the existing upward trend continues. Important parts of CHD's current setup include:
- Consolidation Stage: The report notes prices have been consolidating recently, with a decline giving a possible entry chance. This resting period helps reduce overbought conditions and lets the stock build energy for its next move.
- Clear Support and Risk: A defined support area is found between $98.39 and $100.45, made by a combination of moving averages and trendlines. For a trader, this gives a sensible area to set a protective stop-loss order, clearly setting the trade's risk.
- Positive Indicators: The report also notes a recent "Pocket Pivot" signal, a volume-based indicator that implies accumulation by bigger participants during the consolidation—a positive sign of institutional activity.
The high Setup Rating confirms that CHD's consolidation is organized, with clear points for entry and exit. This directly answers the "when" to buy, a central part of the price surge method, by marking a moment of possible balance before a new attempt to surge.
A Possible Trading Plan
From this examination, the technical report describes a sample trade setup. It proposes a possible entry on a move above $102.20, with a stop-loss set below the support area at $98.38. This sets a risk of about 3.74% on the trade itself. It is important to know this is an explanatory example made from the technical measures, not a suggestion. Every investor must adjust their entry, exit, and position size to their own risk comfort and plan.
Locating Comparable Chances
CHD shows the kind of chance the Technical Breakout search is made to find. For investors wanting to see a new list of stocks that meet similar conditions of technical condition and high-grade setup formations, new choices are found each day. You can view the present results by going to the Technical Breakout Setups screen.
Disclaimer: This article is for information only and does not form investment advice, a suggestion, or an offer or request to buy or sell any securities. The examination is based on technical measures and past data, which are not assurances of future results. Investing includes risk, including the possible loss of principal. Always do your own research and think about your money situation and risk comfort before making any investment choices. The sample trade setup described is automatic and explanatory; real trading choices should be made on your own and with care.
