NEW YORK (Real Money) -- The debate of "chase or wait" will be around as long as trading itself. I think you can also add in "anticipate or wait." Medtronic (MDT) falls into that anticipate or wait category, well, the daily chart does. The stock looks to be knocking on the door of a potential breakout.
The questions for traders, however, is will waiting for the breakout confirmation mean missing too much upside?
To kill the suspense, I think you have to wait here. Medtronic does look bullish, but it's bounced from $74 to $79 without any rest. This is a solid double top and if MDT can get a close over $79, then a push into the $82-$84 area should come quickly. The first test of a double top can be difficult for many stocks. A pullback to the $77 area followed by another retest of $79 would be ideal. I could even justify buying the first bounce of a dip using a tight stop.
We are seeing a decent push in momentum as the relative strength index (RSI) has moved over the midline (50). Meanwhile, we have confirmation from the volume/price side of the equation plus momentum. Both the Chaikin Money Flow (CMF) indicator and Chaikin Oscillator have crossed into buying territory. I use slightly different settings on each, but like to watch for simultaneous crossovers in both. This is an indicator that money flow is lining up with momentum. I'd prefer to avoid any divergences to the bearish side when looking for a breakout. So if looking to buy a pullback, I would keep an eye all three of these indicators to make sure none crosses back over bearishly.