Technical investors often look for stocks showing both good underlying momentum and clear entry points for possible breakouts. One method uses ChartMill's Technical Rating, which evaluates a stock's overall technical condition, and its Setup Quality Rating, which judges the quality of its current consolidation pattern. Stocks with high scores on both measures are seen as leading candidates for technical breakout setups, as they show fundamentally good trends with specific risk parameters. A recent screen using this approach has found ECHOSTAR CORP-A (NASDAQ:SATS) as fitting these strict conditions.
Technical Strength and Momentum
EchoStar's solid technical base is a main reason for its presence on the breakout screen. The stock has a ChartMill Technical Rating of 8 out of 10, showing a technically sound stock with a good positive trend. This high rating is important for the breakout strategy because it confirms the stock is already in a set uptrend, raising the chance that a breakout will lead to a continuation of that trend instead of a false signal. The detailed technical report points out several elements adding to this strength:
- Positive Trend Alignment: Both the short-term and long-term trends for SATS are positive, a good sign for momentum investors.
- Good Relative Performance: The stock is a leading performer in its industry, doing better than 98% of stocks in the Media sector. It also beats 98% of all stocks in the market over the last year.
- Supportive Moving Averages: The stock is trading above its important moving averages (20, 50, 100, and 200-day SMAs), confirming the bullish trend structure.
This mix of a good industry-relative position and a clear, multi-timeframe uptrend gives the "which stock" answer for technical investors, creating a firm base for a possible breakout play.
Setup Quality and Consolidation Pattern
Besides a good trend, a high-quality setup is needed for finding a low-risk entry point. EchoStar does well here too, with a very good Setup Quality Rating of 9 out of 10. This score shows the stock is in a clear consolidation phase, which is a key part of the breakout strategy. These periods of pause after a rise let a stock build energy for its next possible move and give a clear area for setting protective stop-loss orders.
The technical analysis shows a notable setup forming:
- Tight Trading Range: Over the past month, SATS has been trading between $71.04 and $79.05. It is currently consolidating in the middle of this range, which can offer a good entry chance.
- Clear Support Zone: An important support zone has been found between $72.23 and $72.38, made by several trend lines. This gives a logical and specific level for risk management.
- Pocket Pivot Signal: A very recent Pocket Pivot signal was seen, a positive volume/price accumulation pattern that often comes before upward price moves.
This high-quality consolidation answers the "when" question for traders, indicating the stock may be preparing for its next important move.
Potential Trading Setup
The combination of a good technical rating and a very good setup quality allows for creating a specific, rules-based trading plan. The automated analysis proposes a possible breakout setup with set entry and exit points to handle risk in a structured way.
- Proposed Entry: A Buy Stop order could be set at $75.60, which is just above the recent 10-day high, confirming a breakout from the consolidation.
- Proposed Stop-Loss: A protective Stop Loss order could be placed at $72.22, set just below the identified support zone. This level sets the trade's maximum risk.
- Defined Risk: The worst outcome for the trade is a loss of $3.38 per share, or 4.47% from the entry point.
It is important to recognize that the space between the entry and exit in this automated setup is relatively small compared to the stock's average daily movement. Traders should assess whether changing these levels to allow more room fits their own risk tolerance and trading approach.
Finding More Breakout Opportunities
EchoStar Corp-A shows the kind of opportunity that systematic screening can find. For investors looking for a daily list of similar technical breakout setups, the process can be done again using the Technical Breakout Setups screen. This tool sorts the market for stocks that, like SATS, combine high technical and setup ratings, giving a selected starting point for more analysis.
Disclaimer: This article is for informational purposes only and does not constitute investment advice of any kind. The trading setup mentioned is an automatically generated example for educational purposes and is not a recommendation to buy or sell any security. All investments involve risk, and past performance is no guarantee of future results. Always conduct your own research and consider your financial situation and risk tolerance before trading.
