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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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SYM TRADE IT LAST %CHG
EMC $26.89 0.00%
MCD $99.86 0.00%
SPF $8.99 0.00%
ROP $167.27 0.00%
SWKS $95.67 0.00%

Markets

Chart of I:DJI
DOW 17,689.86 -56.12 -0.32%
S&P 500 2,103.84 -4.79 -0.23%
NASDAQ 5,128.2810 -0.5040 -0.01%

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