Despite yesterday’s big market decline our ‘buy on the dip’ suggesting for yesterday’s trade stopped right in the buy zone and rallied.
This sets up a good pattern going forward, and this same pattern exists in today’s trade idea.
Read below for a stock that has not dropped with the market and is poised to move higher
The market remains in a bearing mode, so be very careful about any new position you take on.
Adhere to good risk management.
The weak market does, however, have benefits as I’ve been demonstrating with the relative strength tactics I’m using to identify trades.
Today’s trade idea is The Travelers Co. (TRV).
As you can see from the chart below TRV traded lower yesterday, but it was much stronger than the market, which collapsed below its recent, lows.
TRV gapped lower but then rallied to close higher than its open. It also didn’t trade lower than they prior day.
It also bottomed at a very logical support level of $142.
As a result $142 should serve as a good tight stop on any trade.
If TRV breaks out over its recent consolidation high, then it’s a buy. To confirm the breakout use $144.50 as the price it must clear before entering.
As mentioned above, the stop should be under 142.
As you can see, when you know these patterns, you can keep trading this simple.
Rick Nartarian, Chief Investment Officer
The American Investor Daily