These four stocks have not fully participated in the broader market rally off the November lows this year, but they have spent that time consolidating in individual technical patterns.
They now look poised to break out and potentially make up lost ground.
Shares of the online restaurant delivery platform operator GrubHub (GRUB) - Get Report rallied nearly 140% this year before forming a triple top and breaking below pattern support in the $39.50 area. The pullback found another level of support at $35, forming a "W" reversal bottom with the $39 to $39.50 level now acting as resistance.
In Tuesday's session, the stock price was up 4.8%, closing near its high and recapturing the declining 50-day moving average. In the process, it retested the first level of resistance.
Moving average convergence/divergence made a bullish crossover in November and is tracking higher. The aroon indicator, which is designed to identify early shifts in trend direction, recently made a green-over-red line bullish crossover. These indicators reflect positive short-term price momentum and trend direction. Chaikin money flow moved into positive territory at the end of last month and continues to move higher, suggesting renewed buying interest.
The stock is a long candidate after an upper candle close above $39.50 using a trailing percentage stop.
The daily chart of Etsy (ETSY) - Get Report , the online marketplace, has been making a series of lower highs and higher lows, consolidating in a symmetrical triangle pattern over the last month. The stock is currently testing the downtrend line of the pattern, which is being reinforced by the 50-day moving average.
The relative strength index and moving average convergence/divergence have moved above their center lines, indicating an underlying bias to the upside within the oscillating price movement. Chaikin money flow entered positive territory at the beginning of the month, and the accumulation distribution line is well above its signal average.
The stock is a buy after an upper candle breakout using a trailing percentage stop.
Shares of the telecommunications company Windstream Holdings (WIN) - Get Report dropped sharply in October before finding support in the $6.60 area and reversing course by making a series of higher lows under horizontal resistance at the $7.80 level.
This triangle pattern resistance has been tested repeatedly this month and is being tested once again, along with the 50-day moving average. The technical indicators suggest it is likely to give way to the pressure.
Daily moving average convergence/divergence is overlaid on a weekly histogram of the oscillator and is tracking higher on both time frames, and the relative strength index is above its center line. Chaikin money flow is just above its center line. The money flow index, a volume-weighted momentum indicator, has held its center line for the last month.
The stock is a buy after an upper candle close above horizontal resistance using a trailing percentage stop.
Colgate-Palmolive (CL) - Get Report shares saw a waterfall-like decline in October and November. Since that time, the stock has been forming a rudimentary inverse head and shoulders reversal pattern on the daily chart, with neckline resistance at the $67 level.
A large hammer candle marked the lower end of the right shoulder and another bullish candle formed in Tuesday's session.
The stock is still sitting below the neckline, but as the head of the pattern was forming, the relative strength index moved out of an oversold condition and moving average convergence/divergence made a bullish crossover. Chaikin money flow is entering positive territory and accumulation/distribution has broken above a nearly three-month downtrend line.
The stock still has a way to go to break out, but an upper candle close above the neckline is a long entry point using a trailing percentage stop.
This article is commentary by an independent contributor. At the time of publication, the author held no position in the stocks mentioned.