Last up is medical device maker
). In short, BSX looks "toppy" right now, thanks to a head and shoulders pattern that's taken shape in shares.
The head and shoulders is a topping pattern that's formed by two swing highs that top out at approximately the same level (shoulders), separated by a higher high between them (the head). The sell signal comes on a breakout above the neckline, which is right at $9 for BSX. Momentum, measured by 14-day RSI, adds some extra downside confidence to this trade; it's been in a downtrend of its own since the pattern started forming.
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Lest you think that the head and shoulders is too well-known to be worth trading, the research suggests otherwise. A recent academic study conducted by the
Federal Reserve Board of New York
found that the results of 10,000 computer-simulated head-and-shoulders trades resulted in "profits [that] would have been both statistically and economically significant." If you own BSX right now, I'd recommend taking gains if $9 gets taken out.
To see this week's trades in action, check out this week's
Must-See Charts portfolio
-- Written by Jonas Elmerraji in Baltimore.
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