Arthur J. Gallagher
The chart of Arthur J. Gallagher ( AJG) looks a lot like the chart of Comerica, except AJG is flipped over on its side. Unlike Comerica's uptrend, this insurance brokerage stock has been trending sideways in a pattern called a rectangle. The rectangle gets its name because horizontal resistance and support levels basically "box in" price action. But just like the other setups here, the trade ultimately comes down to buyers and sellers.
So while Comerica's trend channel was a range trade, the rectangle in AJG is a breakout trade. After all, buying AJG at support provides a pretty paltry upside expectation -- it's a mean reversion trade that's been chugging along sideways. So instead, it makes sense to buy the move outside of this stock's range: resistance comes in at $45.50 in AJG, with support at $42.50.I like to think of rectangles as an "if/then trade," In other words, if shares break out above $45.50, then it's a signal to buy shares. Otherwise, if shares break down below $42.50, then AJG is a short candidate. Don't put money in this stock until it resolves its direction with a breakout,