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5 Big Names to Trade for Earnings Season

Stocks in this article: DLTR LVS PG WPPGY ZMH

WPP Group

London-based advertising and PR firm WPP Group ( WPPGY) has seen some impressive performance of its own in the last six months. Shares of the $20 billion stock have rallied more than 25% over that time. Since then, they've taken a breather, trading sideways since early February. But even though WPP hasn't seen much excitement in the last couple of months, there's still a trade to be made here.

>>5 Rocket Stocks to Buy as Stocks Bounce

That's because WPP's sideways churn has been extremely orderly. In fact, trading has been constrained within a rectangle pattern since the uptrend turned sideways. A rectangle is a pattern that's formed by two horizontal price levels: in this case, resistance above shares at $82 and support below at $78. Rectangles give traders a chance to take a breath and figure out their next move after a big share price change. As a result, it makes sense to make a bet in the direction of the breakout from the channel.

While WPPGY has a large number of gaps in its price chart, traders should pay too much attention to them. Those gaps, called suspension gaps, are the result of WPPGY's off-hours trading on the London Stock Exchange; they can be ignored for technical analysis purposes.

Since this consolidation is coming after a prolonged uptrend, WPP looks likely to resume upside once this rectangle has run its course. I'd recommend keeping a close eye on $82.

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