The Technical Breakout Setups screen is designed to identify stocks that exhibit a combination of strong underlying technical health and a clear, actionable consolidation pattern. The strategy hinges on finding stocks that are already in a solid uptrend—answering the question of which stock to buy—and then pairing that with a stable price base, answering the when to buy question. The goal is to capture the next leg higher as the stock breaks out of its rest period. Darling Ingredients Inc (NYSE:DAR) is a prime example of a stock that currently fits this profile on both fronts.
Recent Performance & Market Context
The broader market environment is supportive for this type of setup. The S&P 500’s long-term trend is positive, and the short-term is also positive, which helps to provide a tailwind for individual stocks. DAR has been a strong performer within this context. Over the last 12 months, the stock has returned roughly 89%, significantly outperforming the vast majority of the market. More specifically, the stock ranks in the 92nd percentile for relative strength compared to all stocks in the database. Within its own industry, Food Products, DAR is outperforming 94% of its peers, which signals clear leadership.
Technical Strength: A Perfect Score
To be a candidate for this breakout strategy, a stock must first prove it has strong technical health. DAR achieves a perfect Technical Rating of 10 out of 10 from ChartMill. This top-tier rating is not arbitrary; it reflects a broad evaluation of the stock's trend dynamics.
The rating confirms that the stock's long-term trend is positive, supported by key moving averages. The 20-day, 50-day, 100-day, and 200-day simple moving averages (SMA) are all rising, with the price currently trading well above its 200-day SMA ($40.35). This alignment of moving averages into a bullish configuration is a classic indicator of a strong, established uptrend.
The technical rating also considers the consistency of the trend. DAR has shown positive performance not just over the long term, but also in the recent quarter (up over 40%) and in the last month (up 3.7%). This shows that the uptrend is sustained and not just a one-time spike. The combination of a perfect technical rating, strong relative strength, and a bullish moving average structure confirms that DAR passes the "which stock to buy" filter with flying colors.
Setup Quality: The Consolidation Pattern
However, a high Technical Rating alone is not a reason to buy. The real value of the breakout strategy comes from the Setup Quality score, which identifies a low-risk entry point. DAR also scores highly here with a Setup Rating of 8 out of 10.
A high setup rating indicates that the price has recently been in a consolidation pattern, building a base. In DAR’s case, it has been trading in a range roughly between $55.83 and $64.90 over the last month. This period of sideways movement is exactly what the strategy looks for.
Furthermore, the setup analysis highlights that volatility has been decreasing, which is a key component of a healthy consolidation pattern. The stock is currently trading near the middle of this range at $60.25, but the pattern suggests a base is forming. The analysis points to an entry trigger at $64.54—a buy stop order placed just above the recent high of that range. This ensures you only get in if the stock demonstrates upward momentum from the base.
The risk is well-defined by the support zone below the current price, identified around $58.83. This provides a clear and logical place for a stop-loss order, resulting in a defined risk of about 10.24% on the trade. By having a lower-risk entry and a clear exit point, DAR successfully completes the "when to buy" portion of the strategy.
Analyst View & Full Report
Investors looking for a deeper examination of the specific indicators and longer-term chart patterns that support this setup can find the full breakdown in the ChartMill Technical Report for DAR.
Find More Setups
This is just one example of a stock currently showing a favorable technical breakout pattern. The screen used to find DAR is designed to run daily, uncovering new opportunities as consolidation patterns form in technically strong stocks.
Click here to run the Technical Breakout Setups screen and find the latest candidates.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. The trading setup mentioned is generated automatically based on technical indicators and should not be used as a sole basis for any trading decision. Always conduct your own due diligence, including checking for upcoming news and earnings reports, before making any trade. You are solely responsible for your own investment and trading decisions.