One popular method for identifying potential breakouts involves screening for stocks that combine solid technical health with a well-defined pattern of price consolidation. The idea is to focus on names where the underlying trend is favorable, but the stock has also recently paused to build a base, offering a more controlled risk/reward profile for a potential entry. Such setups can arise when a strong stock takes a breather, tightening its trading range before attempting its next leg higher. We recently ran this screen and identified a name that fits both conditions.
Strong Underlying Technical Health
The first pillar of the strategy is a sound technical foundation. For this, we look at the proprietary ChartMill Technical Rating, which scores stocks from 0 to 10 based on trend, moving averages, and relative strength. The security in focus, Amgen Inc (NASDAQ:AMGN), scores a 7 on this metric, placing it firmly in favorable territory.
Several factors support this rating. Both the short-term and long-term trends are positive, a crucial foundation for any uptrend continuation. The stock trades above its key 20-day, 50-day, and 200-day simple moving averages, and the 20-day and 50-day averages are rising. Furthermore, AMGN sits in the upper half of its 52-week range, indicating sustained demand. While the S&P 500 is near new highs, AMGN is slightly lagging, but its own structural health remains intact. For technical investors, a rating of 7 or higher generally filters for stocks that are in a confirmed uptrend, making them a more reliable pool to search for entries. A detailed breakdown of these technical factors is available in the full ChartMill Technical report.
High-Quality Setup Pattern
Having a strong trend is only half the equation. A stock can be trending higher but be too extended for a safe entry. This is where the Setup Quality rating comes in. It measures the degree of consolidation, assessing factors like price tightness, proximity to support, and volatility contraction.
AMGN scores a very high 9 out of 10 on setup quality. This suggests the stock has been forming a constructive consolidation pattern. The report notes that prices have been trading in a relatively wide range over the last month ($346 - $378.54) but have recently consolidated in the middle of that range. Volatility is decreasing, which often precedes a breakout. There is a clear support zone identified near $363.54, providing a logical level for a stop-loss order. Additionally, the report highlights a recent "Pocket Pivot" signal, a positive accumulation pattern often observed before significant price moves. This combination of a strong trend and a tight, well-defined base is precisely what the strategy aims to capture, offering a potential entry with a clearly identifiable risk level.
Screening for More Opportunities
This stock was found using a dedicated Technical Breakout Setups screen, which filters specifically for stocks with a Technical Rating of 7 or higher and a Setup Quality of 7 or higher, alongside other filters for price and volume. The daily list of stocks meeting these criteria can change, offering a fresh set of potential candidates regularly. You can view the current results and run this screen yourself via this link.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Always conduct your own research and consider your risk tolerance before making trading decisions.
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Amgen Inc (NASDAQ:AMGN) Shows Technical Strength and Breakout Setup
One popular method for identifying potential breakouts involves screening for stocks that combine solid technical health with a well-defined pattern of price consolidation. The idea is to focus on names where the underlying trend is favorable, but the stock has also recently paused to build a base, offering a more controlled risk/reward profile for a potential entry. Such setups can arise when a strong stock takes a breather, tightening its trading range before attempting its next leg higher. We recently ran this screen and identified a name that fits both conditions.
Strong Underlying Technical Health
The first pillar of the strategy is a sound technical foundation. For this, we look at the proprietary ChartMill Technical Rating, which scores stocks from 0 to 10 based on trend, moving averages, and relative strength. The security in focus, Amgen Inc (NASDAQ:AMGN), scores a 7 on this metric, placing it firmly in favorable territory.
Several factors support this rating. Both the short-term and long-term trends are positive, a crucial foundation for any uptrend continuation. The stock trades above its key 20-day, 50-day, and 200-day simple moving averages, and the 20-day and 50-day averages are rising. Furthermore, AMGN sits in the upper half of its 52-week range, indicating sustained demand. While the S&P 500 is near new highs, AMGN is slightly lagging, but its own structural health remains intact. For technical investors, a rating of 7 or higher generally filters for stocks that are in a confirmed uptrend, making them a more reliable pool to search for entries. A detailed breakdown of these technical factors is available in the full ChartMill Technical report.
High-Quality Setup Pattern
Having a strong trend is only half the equation. A stock can be trending higher but be too extended for a safe entry. This is where the Setup Quality rating comes in. It measures the degree of consolidation, assessing factors like price tightness, proximity to support, and volatility contraction.
AMGN scores a very high 9 out of 10 on setup quality. This suggests the stock has been forming a constructive consolidation pattern. The report notes that prices have been trading in a relatively wide range over the last month ($346 - $378.54) but have recently consolidated in the middle of that range. Volatility is decreasing, which often precedes a breakout. There is a clear support zone identified near $363.54, providing a logical level for a stop-loss order. Additionally, the report highlights a recent "Pocket Pivot" signal, a positive accumulation pattern often observed before significant price moves. This combination of a strong trend and a tight, well-defined base is precisely what the strategy aims to capture, offering a potential entry with a clearly identifiable risk level.
Screening for More Opportunities
This stock was found using a dedicated Technical Breakout Setups screen, which filters specifically for stocks with a Technical Rating of 7 or higher and a Setup Quality of 7 or higher, alongside other filters for price and volume. The daily list of stocks meeting these criteria can change, offering a fresh set of potential candidates regularly. You can view the current results and run this screen yourself via this link.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Always conduct your own research and consider your risk tolerance before making trading decisions.
Read full article here »