The Technical Breakout Being Confirmed With Relative Outperformance.

Today I’m going to be talking about the technical breakout from a consolidation (or continuation pattern) to a new high (whether it be a 3-month high, a 52-week high or a new all-time high) while highlighting the power of the relative performance indictor. This indicator is used to identify relative strength (or outperformance) versus the S&P500 benchmark. Ideally we want to see the relative strength indictor (also known as the RS line which is just a ratio chart of a stock to the S&P500) starting to signal outperformance that leads to a 52-week high breakout. Since most fund managers’ goal is to outperform the benchmark, money tends to flow into stocks showing outperformance. When combined with a powerful technical setup such as a stock breaking out from a base (or strong chart pattern) to a new all-time high, this strategy can not only be very powerful, but very profitable. Being able to identify this type of breakout not only allows investors to take a position in stocks during the early stages of an uptrend (often the starting point of a major price move), but also allows investors to take advantage of the asymmetrical equation that often translates into an acceleration in upside price momentum as there’s no resistance (overhead supply) from people selling at a loss (everyone in the stock is now a holding a winning position). As the saying goes in technical analysis, “the bigger the base, the higher the space.” One must always define their risk beforehand and set a stop-loss order in the event of a signal failure.
Below are four momentum-based setups that fit the above theme when highlighted in the Osprey Strategic Daily Setups:

PXD – Pioneer Natural Resources Co

(identified in the Daily Setups on January 3, 2022)
Pioneer Natural Resources is setting up below horizontal resistance that leads to a new 52-week high as the PPO starts to cross above the zero line. Watch for a breakout.

Follow Up Chart


CF – CF Industries Holdings, Inc.

(identified in the Daily Setups on January 18, 2022)
CF Industries is setting up within a bull flag continuation pattern. Watch for a breakout.

Follow Up Chart


SBLK – Star Bulk Carriers Corp.

(identified in the Daily Setups on January 27, 2022)
Star Bulk Carriers is curling off the lower trendline of a giant ascending triangle continuation pattern as the PPO resets at zero. Watch for a price move back towards the upper trendline of the pattern.

Follow Up Chart


LHX – L3Harris Technologies Inc.

(identified in the Daily Setups on February 24, 2022)
L3Harris Technologies is attempting to trend higher from a sloppy continuation pattern while the weekly PPO starts to curl higher off the zero line.

Follow Up Chart



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