For investors who use charts and price action to guide their decisions, a methodical process for finding possible trades is important. One technique looks for stocks that are both technically sound and making a constructive price pattern, a pairing that can indicate a readiness for a new move upward. This method depends on two proprietary scores from ChartMill: the Technical Rating, which measures the general condition and trend of a stock, and the Setup Quality Rating, which judges whether the stock’s recent price action shows a clear and low-risk entry point. By concentrating on securities that rate highly in both areas, technical investors try to take part in the next upward move of already-established market leaders.
A recent scan using this method has identified 3M CO (NYSE:MMM) as a candidate worth further review. The industrial conglomerate, known for its wide array of consumer, safety, and industrial products, is now showing traits that often interest breakout traders.
Judging Technical Strength
The base of this method is a stock’s basic technical condition, as a solid trend supplies the momentum required for a good breakout. 3M’s ChartMill Technical Rating is a strong 9 out of 10, putting it securely in the top group of stocks from a trend viewpoint. This high rating is not random, it is backed by several important metrics detailed in the full technical report.
- Long-Term Trend Condition: The long-term trend is labeled positive, a key element for trend-following methods. The stock is trading above its important moving averages (50-day, 100-day, and 200-day), and all these averages are themselves in rising arrangements, confirming continued buying pressure over multiple periods.
- Sound Relative Performance: Over the last year, MMM has done better than 82% of all stocks in the market. This better relative performance shows it is a market leader, not just rising with a rising market. The gains have been steady, spread out over the time rather than dependent on one spike.
- Place Within Range: While the stock is trading in the higher part of its 52-week range, it is seen as somewhat behind the S&P 500, which is at a new high. For a breakout trader, this can sometimes offer a chance if the stock catches up to wider market strength.
A high Technical Rating answers the first question for a trader: "Is this a stock I want to own?" For MMM, the evidence points firmly toward yes, given its confirmed uptrend and leader position.
Judging the Setup Quality
A solid trend by itself is not enough for a well-timed entry, buying a stock that has moved far often results in quick pullbacks. This is where the Setup Quality Rating becomes important, answering the trader's second question: "Is now a good time to buy?" 3M receives a top-level Setup Rating of 9, indicating its recent price action has made a constructive pattern.
- Consolidation Within an Uptrend: The report states that over the last month, MMM has been trading in a range between about $162 and $175 and is now consolidating in the middle of this band. This kind of pause or mild pullback inside a bigger uptrend is typical behavior that can reset overbought levels and form a new base for progress.
- Clear Support and Resistance: The analysis finds a well-marked support area around $165.10 and a resistance area starting at $171.60. These levels give clear reference points for planning a trade, a possible entry above resistance and a protective stop-loss below support.
- Supportive Volume Action: A specific positive signal noted is a recent "Pocket Pivot," which is a price move up on higher volume than the worst down volume day in the earlier period. This can be an early signal of institutional accumulation during a consolidation phase, adding trust to the setup.
The high Setup Rating shows that MMM is not only trending, it is doing so in a controlled way, offering a recognizable pattern with sensible risk management points. The automated analysis even proposes a sample trade setup, suggesting an entry at $173.11 (above resistance) with a stop at $163.83 (below support), which would mean a managed risk of about 5.4% on the trade.
Summary and Next Actions
For technical investors using a breakout method, 3M CO offers a notable example. It joins a high-probability context, a stock in a solid, long-term uptrend, with a high-quality setup marked by a consolidation pattern near highs and clear, close support and resistance levels. This match of sound technicals and a constructive pattern is exactly what screens like the Technical Breakout Setups are made to find.
It is vital to recall that technical patterns show probabilities, not guarantees. Any trade should be done with correct risk management, and investors should always think about fundamental factors and upcoming company events, like earnings reports.
Interested in finding other stocks now showing similar technical signals? You can find new breakout setup candidates each day by visiting the Technical Breakout Setups screen.
,
Disclaimer: This article is for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. The analysis is based on technical data and automated scoring models. All investing involves risk, including the potential loss of principal. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.
