5 Big Stocks to Trade for Gains

Fomento Economico Mexicano

$165 billion Mexican beverage company Fomento Economico Mexicano (FMX) is showing investors a similar pattern right now, just in the longer-term. FMX has been trading within a long-term channel of its own since the start of 2012, and like JPMorgan, this stock's support and resistance levels give traders a good picture of its likely moves.

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I mentioned earlier that the best time to buy a stock in an uptrending channel is when it's close to support. After all, it's the place where shares have the furthest to move back up to resistance (the top of the channel) and where they have the least distance to move through support. Since a breakdown below support means that the channel is broken, it's also a logical place to put a stop below; that means minimal risk. That's not the case yet with FMX -- this stock is still coming down off of resistance.

If you're looking to put in a position in FMX, I'd recommend waiting for shares to come down to support, and then bounce off of it. The bounce means that you'll miss a couple points on your entry, but it indicates that shares can still catch a bid at support. All support levels do fail eventually, and when they do, you don't want to be left holding the bag. Waiting for the bounce limits that risk.

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