Charting Three Top Trending Stocks to End August

Aug 26, 2014: 9:56 AM CST

I’m a big fan of the concept of “Strong Getting Stronger,” and three such stocks stand out as strong candidates.

All three names are overextended so these aren’t instant-buy candidates, but they do underscore the principle of trend following (as opposed to fighting a trend).

Let’s take a look at three strong, overextended stocks as we end August.

US Steel (X):

I’ll just do a quick highlight of these stocks and allow you to compose your own analysis and spot potential entries as they develop.

US Steel broke above the $28.50 horizontal resistance (rectangle) area with a strong impulse candle (on high volume and momentum) and continued the uptrend higher on a straight-up impulse toward the $40.00 per share region.

We’ll focus attention on the $40.00 level but will remember the “breakout and impulse” lesson here.

Next is Southwest Airlines (LUV):

Southwest Airlines has been a relentless uptrending stock, trading (almost) straight up from the $14.00 level low at the end of 2013.

The best spots to enter strongly trending stocks are pullbacks (retracements) or breakouts.

At this point, LUV is more likely to pullback/retrace than to extend its strong rally but don’t count this stock out.

Finally, Gilead (GILD) may be an aggressive “fade” candidate:

GILD has shown up on our intraday “Consecutive Closes” scan for members and the stock now faces a major decision point.

Price traveled higher like a rocket into space from the breakout above $95.00 that continued without ceasing above $100.

This stock is so strong, that I highlighted it as an educational lesson from February 2014:

Trend Structure Breakouts and Lessons from Gilead GILD

We can still apply the lessons of “strong getting stronger” and trading opportunities that develop as stocks surge higher.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

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