For investors focused on technical analysis, finding stocks that are both fundamentally sound and ready for a near-term price move is a constant goal. One method involves screening for stocks that show solid underlying technical condition while also forming a consolidation pattern, hinting a potential breakout may be near. This method uses two proprietary scores from ChartMill: the Technical Rating, which measures the overall condition and trend of a stock, and the Setup Quality Rating, which evaluates the quality of its current price pattern for a possible entry. A stock scoring well on both measures presents a strong case for technical investors, as it joins a positive trend with a tactical chance.
Technical Condition: A High-Level Performer
The base of any breakout candidate is a solid underlying trend, and The New York Times Co.-Class A (NYSE:NYT) shows this clearly. According to the latest ChartMill Technical Analysis report, NYT receives a perfect Technical Rating of 10 out of 10. This high score is not given easily; it shows very good performance across multiple timeframes and compared to the wider market.
Key factors adding to this top rating include:
- Steady Positive Trends: Both the long-term and short-term trends for NYT are rated as positive, showing aligned momentum across different time horizons.
- Solid Relative Performance: The stock is doing better than 87% of all stocks in the market over the past year and 84% of its peers in the Media industry, indicating clear relative condition.
- Price Above Key Averages: NYT is trading well above its 20, 50, 100, and 200-day simple moving averages, with all averages in a rising formation. This layered alignment of support levels is a classic sign of a sound uptrend.
- Nearness to Highs: The stock is currently trading close to its 52-week high of $72.32, which, when joined with the wider market also being near highs, suggests its condition matches the overall positive setting.
This very good technical condition is important for the breakout strategy because it raises the chance that any upward move from a consolidation will be maintained, instead of quickly turning down. A stock in a firm uptrend provides a positive condition behind it.
Setup Quality: A Tight Pattern
While a solid trend is needed, it is not enough for a good entry. A stock that has risen quickly can be "overstretched," making it risky to follow. This is where the Setup Quality Rating becomes key, as it finds periods of consolidation or narrow trading ranges that often come before the next move up. NYT scores a 9 out of 10 on this measure, pointing to a very good setup pattern.
The analysis notes several positive features:
- Lowered Volatility and Consolidation: Over the past month, NYT has been trading in a fairly narrow range between $68.69 and $72.32. This time of pause after a solid run lets the stock ease any overbought states and form a new base of support.
- Clear Support and Resistance: The report finds a defined support area between $69.39 and $71.18, made by a mix of moving averages and trendlines. Just above the current price sits a resistance area from $71.49 to $71.75. These clear levels help outline risk and possible gain.
- Positive Accumulation Signal: A recent "Pocket Pivot" signal was seen, which is a price/volume pattern often linked with institutional buying during a consolidation phase, adding a note of confirmation to the setup.
For a breakout trader, this high setup score is the trigger. It suggests the stock is not just in good condition, but is also "forming" by moving in a narrow range, possibly building pressure for a move past the identified resistance.
A Clear Technical Picture
Based on this analysis, a specific technical picture is shown. The consolidation has created a possible entry point just above the immediate resistance at $71.76, which would signal a breakout from the recent range. A stop-loss order could be placed below the support area at $69.90, limiting the downside risk on the trade to about 2.6%. This formation provides a clear, rules-based plan for handling the trade, which is a key part of disciplined technical investing.
Finding More Possibilities
The combination of a perfect Technical Rating (10) and a very good Setup Quality (9) makes NYT a clear example of the kind of possibility the Technical Breakout screen is made to find. For investors interested in seeing the current list of stocks meeting similar strict conditions, the screen is updated daily and can be found here: View Today's Technical Breakout Setups.
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Disclaimer: This article is for informational purposes only and does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any securities. The analysis is based on technical measures and historical data, which are not guarantees of future performance. All trading and investment decisions involve risk, including the potential loss of principal. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
