Technical investors often look for stocks that are not only in a strong uptrend but are also moving in a tight range, setting up for a possible breakout. This method uses two main measures: the ChartMill Technical Rating, which checks the general condition and trend of a stock, and the ChartMill Setup Quality Rating, which judges the state of its current range pattern. A high Technical Rating points to a solid, confirmed uptrend, while a high Setup Rating shows the stock is moving in a set range, giving a visible entry point with controlled risk. The aim is to locate stocks that rate well on both measures, preparing for a rise as they leave the range.
PERIMETER SOLUTIONS INC (NYSE:PRM) recently appeared from a screen made to find such technical breakout setups, getting a full 9 out of 10 on both its Technical and Setup Quality ratings. This double high score makes it an interesting pick for traders who watch momentum and patterns.
Technical Strength: A Base of Momentum
The base of any breakout plan is a stock with basic technical strength, which the ChartMill Technical Rating of 9 for PRM firmly shows. This high number shows a marked and continued uptrend, a key filter because breakouts from poor or falling stocks have much greater risk. The technical report notes several points backing this rating:
- Marked Long-Term Trend: The long-term trend for PRM is seen as positive. This is the most important setting for a breakout trade, as it raises the chance that a move away from the range will keep going in the current upward path.
- Notable Relative Performance: PRM's performance is clear not just on its own but compared to the wider market. Over the last year, the stock has done better than 95% of all other stocks. Even more, within its Chemicals industry, it does better than 96% of its 83 peers, showing clear sector strength.
- Place Near Highs: The stock is now trading near its 52-week high of $29.78. While the S&P 500 is also near highs, PRM's performance matches the market's stronger names rather than following it, which is a good sign for momentum.
- Firm Moving Average Position: The stock trades above its main long-term moving averages (50-day, 100-day, and 200-day), all of which are going up. This layered support form is a standard sign of a good uptrend.
This solid technical picture answers the first question for a technical trader: "Is this a stock I want to own?" The high rating shows PRM is in a confirmed uptrend with clear momentum, making it a fit choice for more setup study.
Setup Quality: The Range Before the Move
While a strong trend is needed, it is not enough for a good entry. A stock can be overbought and ready for a drop. This is where the Setup Quality Rating is key, answering the trader's second question: "Is now a good time to buy?" PRM's Setup Rating of 9 suggests the stock is in a good range, having traded in a set band lately, which allows for a clear view of risk.
Main points from the technical report that add to this high setup score are:
- Set Trading Band: Over the past month, PRM has traded between $26.92 and $29.78. The report notes it is now trading in the middle of this band, where prices have been ranging. This time of pause after a strong rise is just the kind of pattern breakout traders seek.
- Visible Support and Resistance: The study finds a clear support area between $27.51 and $28.08, made by a mix of trend lines and moving averages. Just above the current price, a resistance area sits between $28.65 and $28.90. These set levels allow for exact trade planning, with a possible entry above resistance and a protective stop-loss order placed below support.
- Recent Buying Signal: The report points out a very recent "Pocket Pivot" signal. This is a volume-based sign that suggests buying, or purchase by bigger investors, during the range phase, adding more weight to the chance of an upward move.
A Possible Trade Setup
From this study, the technical report describes a sample breakout setup. It suggests a possible entry on a buy-stop order at $28.91, which is just above the found resistance area. A stop-loss order could be placed at $27.50, below the main support area, setting the risk on the trade at about 4.9%. This ordered method shows how the mix of high technical and setup ratings can turn into a specific, rules-based trading plan.
For investors and traders wanting to see the full technical view, the complete ChartMill Technical Analysis report for PRM gives more detail on the signs and levels talked about.
Finding More Breakout Chances The method that found PERIMETER SOLUTIONS INC can be used each day to find new possible setups. Investors looking for similar chances in other strongly trending stocks can check the current list of choices by going to the Technical Breakout Setups screen.
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 study given is based on technical measures and should not be the only ground for any investment choice. All trading and investment choices have risk, including the possible loss of main funds. Readers should do their own study and talk with a registered financial advisor before making any investment choices.
