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5 Big Stocks Set to Slingshot Higher

Roper Industries

A very similar setup is shaping up in shares of Roper Industries (ROP - Get Report) right now. For this stock, the resistance level to watch is $103, and support comes in at $95. Like SWKS, the key to trading this setup is to wait for a break outside of the channel, and then take a position in the direction of that breakout.

If you cut your teeth as a value investor, it may seem unintuitive to buy when the stock's price is higher and sell when the valuation gets cheaper. But there's a very good reason for trading ROP like that; to understand it, you've got to think about what's going on with buyers and sellers.

>>5 Bargain Stocks With Tons of Cash

Essentially, that $103 resistance level exists because there's a glut of supply of shares at and above $103 -- it's a place where sellers are more eager to sell and take gains than buyers are to buy, and price stalls out there as a result. A breakout above $103 signals that buyers have completely absorbed the asks above $103 (they'd have to for ROP to print a price above that level). Without that technical barrier to prices moving higher, suddenly buying ROP above $103 becomes a high probability trade.

As a technical trader, you shouldn't care if a stock becomes more expensive as long as it keeps getting more expensive after you buy shares.
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ROP $173.57 -1.50%
SWKS $65.28 -2.60%
SPF $0.00 0.00%
EMC $26.25 0.34%
MCD $129.74 1.00%


Chart of I:DJI
DOW 17,646.54 -104.37 -0.59%
S&P 500 2,049.42 -13.95 -0.68%
NASDAQ 4,722.6130 -40.6110 -0.85%

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