Author: Rick Pendergraft, Trades Of The Day

Trending higher over the last five months, it just hit the lower rail of the channel while the stochastic indicators hit oversold territory for the first time since June.

It hit resistance and moved lower in the last few days. The pullback was enough to cause the stochastic readings to make a bearish crossover while in overbought territory.

The underlying stock’s stochastic indicators are in oversold territory and made a bullish crossover last night.

The main driver behind this trade idea is the chart. The stock hit the upper trend line before turning lower yesterday and the stochastic indicators are in overbought territory and made a bearish crossover last night.

The stochastic indicators are showing similar setups to October and July. In both of those cases, the stock rallied nicely over the next month and a half and I look for another strong rally here.