We're seeing the exact same setup in shares of Stryker (SYK) right now. Like Dover, Stryker is forming a double top pattern. The big difference with SYK is the fact that this pattern isn't as far along (it still hasn't broken down yet). That gives traders and investors a chance to be earlier on the move.
Stryker is another name that's seen stellar relative strength for the better part of 2013. Year-to-date, shares of the medical device maker have rallied more than 17%, besting the broad market by a factor of nearly two. But shares are hitting their head on a price ceiling right now -- and a move through the $64 breakdown level signals that it's time to be a seller in SYK.Momentum, measured by 14-day RSI, adds some extra downside confidence to this trade. While RSI was in an uptrend for most of SYK's rally, that uptrend broke earlier this month as the momentum gauge started making lower highs. Since momentum is a leading indicator of price, that's a bearish sign. Still, I wouldn't recommend changing your position in SYK until $64 gets taken out. Until then, this setup could see a reprieve by breaking out above those two tops.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV