Chicago, IL – July 12, 2011 - Stocks in this week's article include Edwards Lifesciences Corp. (NYSE: EW), The Ensign Group, Inc. (NASDAQ: ENSG), MDC Partners, Inc. (NASDAQ: MDCA), Valeant Pharmaceuticals Int'l, Inc. (NYSE: VRX) and WGL Holdings, Inc. (NYSE: WGL). Kevin Matras screens for bullish chart pattern set-ups with the best fundamentals.
Screen of the Week written by Kevin Matras of Zacks Investment Research:
One of my favorite patterns to trade is the Symmetrical Triangle. These are continuation patterns.
Continuation Patterns generally will continue in the direction of the trend. If the trend was up, and then pauses, the expected breakout would be to the upside. If the trend was down, the ensuing breakout would likely be to the downside.
Today, we're going to focus in on a bullish pattern.
The science behind this pattern is quite simple. The market has gotten a little ahead of itself and it needs to consolidate. Attempts to push higher are met with selling. And attempts to push lower are met with buying. Each new lower high and higher low is shallower than the last, until the chart pattern takes the shape of a right-sided triangle.
Eventually, the triangle resolves itself, and often with an explosive move in the direction of the preceding trend.
To screen for symmetrical triangle patterns, first define the size of the pattern by the length of time it took to develop. For example, a one-month pattern, or a two-month pattern, etc. Then put in the logic.
Here are the parameters for a 3-month long bullish symmetrical triangle pattern...
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