Two Laggards Set to Play Catch-Up

The broader market has performed well since the early October low, and it looks like the trend may continue. Here are two laggards that have spent most of that time consolidating under well-defined resistance, and they look poised to break out and make a catch-up move.

The first is PetSmart (PETM), a retailer of specialty goods for pets. It has been consolidating under resistance in the $73.90 area for the last month. Moving-average convergence/divergence has made a bullish crossover and the relative strength index is above its 21-period average and centerline. Volume has slacked off as it normally does during periods of consolidation, but Chaikin money flow is positive, showing that a large percentage of the lower volume is to the buy side. The stock price has been holding above its 50-day moving average and in the upper Bollinger band. Those bands have contracted to an extreme reading, suggesting the potential for a volatile move. The long trade is triggered by a close in upper candle range above resistance, with a trailing percentage stop....128 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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