NEW YORK (Real Money) -- The stocks of cable and satellite entertainment content providers Discovery Communications (DISCA), Viacom (VIA), and Liberty Media Corporation (LMCA) have been undergoing price consolidation on their weekly charts. They look as if they are preparing to break above resistance and move higher.
Discovery Communications can been seen operating in a four-month channel, beneath resistance in the $34.00 area and its 10-week (50 day) moving average. A triangle pattern has formed on the Liberty Media chart above the $37.75 area and below a three-month downtrend line. Finally, Viacom shares have been trending lower, but are back above their 10-week (50 day) moving average. They look ready to take on the long-term downtrend line that has defined their decline.
A look at the daily charts focuses on the key resistance levels that will trigger the trades. The Discovery Communications chart highlights the intersection of the declining 200-day moving average and channel resistance. The relative strength index and the volume-weighted money flow index have crossed above their 21-period signal and center lines, reflecting positive price and money flow momentum.
This week the stock is making a concerted effort to break through the top end of the channel. A successful pattern breakout projects to the $37.50 area. Discovery is a buy after a close in upper candle range above channel resistance, with an initial stop under the 50-day moving average. The pattern projects a price target in the $37.50 area.
Editor's Note: This article was originally published at 1:15 p.m. EDT on Real Money on June 4, 2015.