Big down days in the market like Friday create an opportunity to identify trading opportunities for when the market stabilizes.
Today’s trade idea is ready jump higher, but it would be prudent to wait for the market to show some strength first.
However, the up move in this stock could start as soon as today.
This type of setup is one I’ve highlighted several times for you during the recent market weakness. We’re looking for stocks that have been consolidating or holding support as the market declines.
When the market stabilizes, or better begins to rally, these stocks can have big moves.
As you can see from the chart below Church & Dwight (CHD), has been consolidating for about two months as the market has pulled back.
In addition, CHD is trading near the high of this consolidation range, and during Friday’s weakness it didn’t trade under its prior day low.
As a result, the trade setup becomes very clearly defined.
The entry is triggered when CHD trades over Friday’s high significantly, $75. For more confirmation a break over the 2-month range could be used as well, $75.50.
Once the move up begins the stop is below Friday’s low, $74.
Be patient. Trying to catch the low day in the market is usually a losing game.
Rick Nartarian, Chief Investment Officer
The American Investor Daily