Express Scripts (ESRX - Get Report) is essentially forming the exact same setup right now. As with PAY, shares of this pharmacy benefit manager have been testing a resistance level into the fourth quarter of 2011, only to break out at the start of the year.
ESRX is no stranger to throwbacks -- in fact, shares actually staged a minor one immediately after the breakout above $48 in January. Now a second (more textbook) throwback is coming into play.
For Express Scripts, there's some added assurance that a throwback in shares will be successful. For starters, that $48 support level isn't just the breakout price, it's also the level where the 50 and 200-day moving averages are converging. That added support increases the probability that support will hold at $48.Also in our favor is the fact that momentum, as measured by the 14-day RSI, is locked in an uptrend at the moment despite the return to test support. Regardless of those supporting factors, we'll still want to see a bounce before buying ESRX becomes a high-probability trade. Express Scripts, one of 8 Big Acquirers of 2011, shows upon a list of 8 UBS Stock Picks for 2012. I also featured it recently in " 7 Hot Stocks on Traders' Radars." Follow @stockpickr