NYSE:DFS may be ready to breakout.

Our stock screener has spotted DISCOVER FINANCIAL SERVICES (NYSE:DFS) as a possible breakout candidate. A technical breakout setup pattern occurs when the stock is consolidating after a nice uptrend. Whether the actual breakout occurs remains to be seen of course, but it may be interesting to keep an eye on NYSE:DFS.

Zooming in on the technicals.

ChartMill assigns a Technical Rating to every stock. This score ranges from 0 to 10 and is updated daily. The score is determined by evaluating multiple technical indicators and properties.

We assign a technical rating of 8 out of 10 to DFS. Although DFS is only a medium performer in the overall market, the technical picture looks good in both the medium and short term time frames.

• The long and short term trends are both positive. This is looking good!
• DFS is one of the better performing stocks in the Consumer Finance industry, it outperforms 87% of 56 stocks in the same industry.
• DFS is currently showing a bull flag pattern! A bull flag pattern occurs when prices pull back slightly after a strong rise up. This may be a nice opportunity for an entry.
• Looking at the yearly performance, DFS did better than 74% of all other stocks. However, this overall performance is mostly based on the strong move around 4 months ago.
• DFS is currently trading in the middle of its 52 week range. This is in line with the S&P500 Index, which is also trading in the middle of its range.

Looking at the Setup

Besides the Technical Rating, ChartMill also assign a Setup Rating to every stock. This setup score also ranges from 0 to 10 and determines to which extend the stock is consolidating. This is achieved by evaluating multiple short term technical indicators. NYSE:DFS currently has a 9 as setup rating:

DFS has an excellent technical rating and also presents a decent setup pattern. Prices have been consolidating lately and the volatility has been reduced. There is a resistance zone just above the current price starting at 108.78. Right above this resistance zone may be a good entry point. There is a support zone below the current price at 108.08, a Stop Loss order could be placed below this zone. Another positive sign is the recent Pocket Pivot signal.

Trading breakout setups.

A breakout could materialize when the stock breaks out to new highs above the current consolidation zone. One could wait for this to happen and buy when this happens. A stop loss could be placed below the consolidation zone.

Of course, there are many ways to trade or not trade NYSE:DFS and this article should in no way be interpreted as trading advice. The article is purely based on an automated technical analysis and just points out the technical observations. Always make your own analysis and trade at your own responsibility.

Our Breakout analyzer lists more breakout setups and is updated daily.