5 Relative Strength Trades Flashing Buy
Japanese farm and construction equipment maker Kubota (KUB) is forming a channel of its own, but instead of a channel higher, KUB is consolidating sideways. That's not a huge surprise, though. KUB has been on a 30% rally of its own in 2012, outperforming the broad market by a big margin -- the recent consolidation channel gives shareholders a chance to catch their breath and figure out their next moves.
Kubota's channel is a price pattern called a rectangle. It's formed by horizontal resistance to the upside and horizontal support below shares. Unlike an uptrending channel, there isn't a whole lot of point in buying shares within the channel -- they're just meandering sideways, after all. So the breakout is the way to trade this stock.
As you can see in KUB, this breakout has already happened: on Friday, shares confirmed a breakout above the $53 resistance level, sending a buy signal for traders. Shares haven't moved much since that breakout happened, so there's still time to jump on this trade -- just keep a tight stop in place.
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