A break above well-defined resistance or a key moving average on improving volume and positive money flow is a powerful combination of technical indications.
These three stocks fit the formula and are potentially profitable long candidates.
Crown Holding (CCK) designs and sells packaging goods for consumer products. The stock had been consolidating above its 200-day moving average and below its 50-day average for the last month, but this week it broke above moving average and trend line resistance in the $55 area.
Moving average convergence/divergence and the relative strength index are tracking higher and above their center lines, reflecting recent positive price momentum. Chaikin money flow, which began improving after the stock formed a hammer candle on its 200-day moving average, is now crossing into positive territory, confirming the sharp spike in volume in Monday's session.
The stock is a long candidate at its current level using an initial percentage stop under the 50-day average.
Shares of Dish Network (DISH) consolidated in a large triangle pattern during the third quarter of the year. They then broke above the downtrend line in September, rallying to the October high, which was the pattern price target projection.
Dish is back above the 50-day moving average and is threatening another breakout above the downtrend line of an abbreviated version of the previous triangle pattern. Stochastics have moved out of an oversold condition and are crossing its center line. Moving average convergence/divergence is making a bullish crossover. And the accumulation/distribution line moved above its 21-period signal average.
The stock was up 2.8% in Tuesday's session and a conservative entry would be after a pullback to the $57 to $56.50 area, with a position size that accommodates an initial stop under the $54 support line.
The stock price of business and software services company CA (CA) has been moving lower for the last three months in a large declining channel. But this week, it is breaking above a nexus of resistance created by the 50- and 200-day moving averages and the pattern downtrend line.
The price momentum indicators bottomed out at the same time as the stock price and are moving above their center lines, and Chaikin money flow is well into positive territory.
This is another stock that may need to digest recent gains. It would be a buy in the $32 area, using a trailing percentage stop below the uptrend line drawn off the November lows.