• Trading 101: Bull Flags Everywhere? – Some Setups to Watch

    by  • May 21, 2013 8:18 am • Trading 101 with Peter Bryans • 2 Comments

    It wouldn’t be unreasonable to think that the market is going to take a “pause” for a few days before possibly making another run higher. Whatever happens, I’m not going to try and make a definitive market call (i.e. by trying to call a top).  You’ll never find me doing that on here, as it’s not part of my game. While we certainly remain bullish in the longer-term here at Schaeffer’s, I will continue to look at charts that I find the most compelling. Right now, I am seeing a lot of stocks that are forming a common technical pattern known as a “bull flag”. You can read about it on StockCharts at the embedded link—it is a good pattern to incorporate into your technical analysis. Here are some setups that I think you should watch. All of this data is as of the close on Monday, 5/20/13.

    Apparel store Abercrombie & Fitch (ANF) is lagging the broader market (up 13% YTD), but it could be ready to make another solid move. ANF is bull flagging  higher and could be poised to make a run up to ~$58. A pickup in volume is always key with these breakouts so be on the lookout for further strong demand from buyers, especially on an intraday basis. ANF is already up against its 52-week high, but looks poised to possibly play some “catch up” with the indices.

    (courtesy of eSignal)

    Technology firm American Tower Corporation (AMT) has also lagged the S&P 500 YTD. Technology stocks in general have been showing some signs of relative strength as of late, and AMT could follow its cohorts in the tech sector. The huge sell-off on 5/1 formed a long “flag pole” and since then AMT has been trading near the top of this range. A measured move could go as high as ~$94.

    (courtesy of eSignal)

    UPS–perhaps my favorite bull flag setup right now. The strength in transports should be nothing new, and UPS is up against its recent 52-week high. The stock also boasts a YTD gain of nearly 22%. It almost seems as if a new transportation stock is breaking out every other day. Keep UPS on your radar.

    (courtesy of eSignal)

    These flags that are forming on the daily charts have a high probability of exploding higher if we can get some additional legs to continue this rally. These three charts are merely a few examples of the hundreds that are probably out there. The bottom line is that opportunities in this market are plentiful—don’t get too worked up in trying to anticipate a correction or pullback in this market. It will only take your energy and efforts away from what has been an incredibly strong bull market. Good luck out there.


    Peter Bryans joined the Schaeffer's Investment Research trading team as a Trader in April, 2012. A graduate of the Fisher College of Business at The Ohio State University -- where he concentrated in Finance -- Peter previously held internships with an insurance broker and a wealth-management firm. In his current role, Peter trades a variety of our real-time option services and also hosts our "Options Apprentice" weekly webinar presentations.


    2 Responses to Trading 101: Bull Flags Everywhere? – Some Setups to Watch

    1. Herck Syboutzen
      May 29, 2013 6:45 am at 6:45 am

      Here I am on 5/29 checking these 3 charts. Wha’ hoppin’ mon? They go south not north. Interesting to note these in 2 year charts. ANF encountered some heavy overhead resistance. AMT backed off the upper trend line of a rising channel. UPS has that nice “stairstep” look. Food for thought.

    2. Zac
      May 23, 2013 9:58 pm at 9:58 pm

      Excellent insight, as usual, Peter! Thanks for the tips.

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