This Stock Refuses to Sell Off

This Stock Refuses to Sell Off

Today’s trade idea is breaking out of a month-long consolidation pattern on the biggest volume that it’s had in 3 months.

The consolidation is also at the highs of 2019, so this is moving higher ahead of the market. This is a bullish sign.

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As you can see by the chart below, Cerner (CERN), closed over its multi-week consolidation pattern on Friday.

It also traded 250% greater than average volume. The unusual volume came in the morning, and then again in the last 5 minutes.

I don’t usually cover intra-day price action, but in this case, the last 5-minute period saw a big spike in volume and a spike in price. I don’t consider this to be very telling of what’s to come next. In fact, it can be misleading.

In this case, CERN moved from $73 to $73.36 and closed at $73.23 all in the last bar.

$73.24 was the high of the consolidation pattern from earlier in June, and CERN spent time trading just below that for much of the day.  However, the break to new highs came only in the last few minutes.

As a result, the trade set up requires that we wait for another, more substantial break out to enter the trade.

If CERN trades over $73.50 enter a long trade with a stop under $71.50.

If you prefer a tighter stop, $72.50 may work also. It’s just more likely to get stopped out without CERN ending it’s bull move if there is a weak day in the general market.

In the even that CERN gaps higher, I would limit my entry price to $73.75 and be patient for that price or better.  

Trade smart,

Rick Nartarian, Chief Investment Officer
Darwin Wealth Creation