Mid-cap car part maker LKQ ( LKQ), on the other hand, has participated in the equity rally this year. Shares of the firm have clawed their way 46% higher in the last 12 months alone, in fact. And it doesn't take an expert technical analyst to see what's going on in shares right now.

LKQ is currently forming an uptrending channel, a trading range that's bounded by a trend line resistance and trend line support level. LKQ has climbed its channel in a stair-step pattern. in other words, it's rallied, then consolidated sideways before rallying some more. Those sideways periods are a very good thing because they give the stock a chance to establish support levels on the way up, and they give traders solid high probability entry points.

Right now, LKQ's nearest resistance level is $23.50. If you're looking to jump into this car parts maker, I'd recommend waiting for shares to push through that price first. Support levels at S1, S2 and S3 offer some downside protection, but I'd recommend putting a stop on the other side of the 50-day moving average. If shares fall through that price, the channel is broken, and you wouldn't want to own the stock anymore anyway.

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