Be a Patient Predator

Traders should not act, they should react. The market is a jungle and those who want to eat should hunt down the weakest prey. Often those are stocks that are in tight consolidation and will be forced at some point to make a move in either direction. A patient predator can sit back and wait for an opportunity.

The daily chart of clinical laboratory services company Laboratory Holdings (LH) shows two distinct periods of consolidation over the last three months.  The second phase of consolidation has taken place below the 50-day moving average and in the bottom half of a narrow Bollinger band range. Moving average convergence/divergence has a slight upside bias and the relative strength indicator and money flow index, a relative strength measure of money flow, are both moving above their centerlines. A break outside the tight channel parameters will have to be confirmed by an improvement in volume....277 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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