For technical investors, finding stocks that are in a solid uptrend and ready for their next rise is a main plan. One organized method uses filters for stocks that show both good technical condition and a high-grade consolidation pattern, hinting at a possible breakout. This technique centers on two special scores from ChartMill: the Technical Rating, which measures a stock's trend force and momentum, and the Setup Quality Rating, which checks the compactness of recent price action to find good entry spots. The aim is to locate leading stocks that are pausing before possibly continuing their climb.
Life Time Group Holdings Inc (NYSE:LTH), the company that runs premium athletic country clubs, recently appeared from this filter, showing a picture that may attract traders searching for chances based on technicals.
Technical Strength: A Good Base
The base of any breakout possibility is a good and lasting trend. ChartMill's Technical Rating for LTH is 7 out of 10, marking it as a stock in a clear uptrend. This number is important for the plan, as it removes weaker, forming, or falling stocks to concentrate on confirmed market leaders.
Looking at the full technical report shows the specifics of this rating:
- Trend Position: The long-term trend is marked as good, while the short-term trend is neutral. This mix can mean a stock is settling inside a bigger uptrend, a common state before a breakout.
- Moving Average Backing: The stock is priced above its main rising moving averages (20-day, 50-day, and 100-day SMAs), showing continued buyer interest across several time periods.
- Relative Performance: While LTH's yearly performance is close to the wider market, it has done better than 62% of similar companies in the Hotels, Restaurants & Leisure field over the last three months, displaying strength relative to its sector.
This technical picture shows LTH has the basic momentum that breakout traders want, giving a good setting for a new upward step.
Setup Quality: The Settling Before the Step
A solid trend by itself is not sufficient; a favorable entry spot is needed. This is where the Setup Quality Rating is key. It finds times of lower volatility and price settling, which often come before clear breakouts. LTH gets a top Setup Rating of 9, pointing out an interesting chart pattern.
The technical report mentions several parts adding to this high setup score:
- Recent Price Band: Over the last month, LTH has moved between $28.14 and $30.62. It is now in the center of this band, having moved down from the top edge. This coiling movement shows the settling stage.
- Clear Support and Resistance: The study finds clear, close levels. A firm resistance area is just above at $29.87, while a support area is below, from $27.88 to $28.55. These set borders make a clear risk/reward structure for a trade.
- Good Signal: The report also mentions a recent "Pocket Pivot" signal, a price/volume pattern that can point to gathering by big investors, adding another check for the setup.
For a breakout plan, this high-grade settling is central. It hints the stock is gathering force, giving a sensible entry point above resistance and a close support level for handling risk.
A Possible Trade Plan
From this study, the technical report describes an example breakout setup. The proposed entry is a buy stop order at $29.88, just above the noted resistance. A stop-loss order could be set at $28.56, below the recent support area. This plan tries to enter when a breakout is confirmed while setting a clear exit if the move does not work, holding the risk limited.
Find Other Possible Breakouts The market always shows new chances. The Technical Breakout Setups filter that found LTH is updated each day, looking for other stocks with solid technicals and high-grade setups. You can see the present list of choices by going to the Technical Breakout Setups page.
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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 trade setup noted is an automatically made example for learning and is not a suggestion. All investing and trading has risk, including the chance to lose the original amount. Always do your own study, think about your money situation and risk comfort, and talk with a qualified money advisor before making any investment choices. Past results do not show future outcomes.
