Marcus & Millichap is a brokerage firm that specializes in commercial real estate investment sales, financing, and research and advisory services.
The stock closed Monday at $27.82, down 4.5% year to date, but it's not time to give up on it. For much of the year, it has bounced between support at $22.94 and resistance at $28. The price is now once again testing resistance, and this provides an opportunity to take advantage of what could be a massive breakout that could fill the gap at $40.67 from November 2015.
The key is to enter the stock before it takes out resistance and all the big money notices. As of the weekend, three consecutive closes at more than $27.39 (represented by the green arrow) with positive price action were required. We got one of those closes Monday.
Three such closes would signal tremendous strength and be a more reliable indicator than a one-day breakout above the resistance level of $28.00.
Remember, however, that there is risk involved, so it's important to think about a stop loss. Marcus & Millichap's 120-day average true range is around 0.85, so the stop loss would have to be at less than $25.21.
If for some reason this stock cannot generate three consecutive closes above $27.39, then the price is likely to either consolidate or move back down to the support level.
CBRE Group is a commercial real estate services and investment company. It's fair to say that this stock has seen its ups and downs this year. As of Monday's close of $30.61, it was down 11% in 2016, but up 35% from low in February.
This stock has spent much of 2016 plying a range between support at $25.69 and resistance at $30.93, although it looks like that is about to end. CBRE Group could be days away from the beginning of a large move higher to test $35.00.
On Friday volume spiked to more than 4 million! That's more than double its six-month average. There's an opportunity to enter the stock early before the big money notices.
Although most traders will be waiting for a close above the resistance level, a larger sign of strength would be three consecutive closes of more than $30.17 (represented by the green arrow). We got the first of these on Monday.
Always remember it's important to practice good risk management. Because the 120-day average true range is 0.72, the stop loss would be less than $27.75. That level gives CBRE Group stock room to have normal swings in price while still providing you with protection from getting whipsawed.
If CBRE Group cannot have three consecutive closes above $30.17, it is likely to continue trading in its range for the rest of 2016.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.