We're seeing the exact same setup in shares of Commercial Metals Company
(CMC), a mid-cap steel manufacturer. Like Nissan, CMC is forming a descending triangle pattern, in this case with a support level at $18.50. A breakdown below that $18.50 threshold is our sell (or short) signal for shares.
>>5 Stocks Under $10 Set to Soar
Whenever you're looking at any technical price pattern, it's critical to keep buyers and sellers in mind. Descending triangles are a good way to quickly describe what's going on in a stock, but they're not the reason it's tradable. Instead, it all comes down to supply and demand for shares.
That horizontal $18.50 support level in CMC is the spot where there's previously been an excess of demand for shares; in other words, it's a price where buyers have been more eager to step in and buy shares at a lower price than sellers were to sell. That's what makes a breakdown below support so significant -- the move means that sellers are finally strong enough to absorb all of the excess demand at the at price level. So if $18.50 gets taken out, you'll want to join them in exiting shares.
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
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
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts