The trade set-up is simple: find a strong uptrend with well defined support, wait for a pullback to that support area, and then wait for a bounce and follow through. These four stocks also have a well defined resistance area (trend channel top) which provides an approximate area for taking profits. Here are the stocks, trades and levels to watch.

Abbott Laboratories (NYSE:ABT) has been moving within an upward channel since September, and bounced off the channel low in mid-April. This was followed by a smaller pullback which created a higher low at $37.78 on April 28. On April 29, the stock made the turn back to the upside. The expectation is that the price will continue to trend back toward the top of the channel. A stop loss can be placed below $37.50, with a target near $41.

Abbott Laboratories (NYSE:ABT) has been moving within an upward channel since September, and bounced off the channel low in mid-April.

Fidelity National Information Services (NYSE:FIS) has a well tested channel going back to June, and is currently testing the channel bottom in April. The first pullback touched the channel bottom on April 11 ($50.99), had a small rally and created a higher low on April 28 ($51.37). A 1.73% jump on April 29 could be the turning point for this stock as it heads back higher toward the top of the channel. A move above $53.30 will break the short-term downward trendline and help confirm the move higher. Place a stop loss below $51 and a target near $56.70.

Fidelity National Information Services (NYSE:FIS) has a well tested channel going back to June, and is currently testing the channel bottom in April.

United Rentals (NYSE:URI) met with resistance twice in April just below $97 ($96.72 high) but was unable to push past it. On the pullback, the price bounced off the trendline ($85.01) moved back toward the high and is now potentially bouncing off the trendline again. April 28 approached the line, and a strong 2.79% pop on April 29 indicates the channel has held again. A stop loss can be placed near $88, below the April 28 low. $96 to $96.72 is still a resistance area, so a target can be placed there, but if the price breaks the area, the target is the top of the channel near $100.

United Rentals (NYSE:URI) met with resistance twice in April just below $97 ($96.72 high) but was unable to push past it.

Legg Mason (NYSE:LM) has a nice trend going since October. The stock bounced off the trendline in February, and has revisited it in April. Once again, the trendline was tested in mid-April, and was followed by a small rally and then a higher low on April 28. A 1.92% jump may be enough to get the stock tracking toward the top of the channel. A stop is placed below $44.50 with a target at $50.25.

Legg Mason (NYSE:LM) has a nice trend going since October.

The Bottom Line

These stocks are trending strongly and recently bounced off support. There is added confirmation of a short-term higher low, indicating buyers are back in control and could take the stock back toward the top of the channel. There are no sure things though, which is why a stop loss is used. The targets provided are below the channel top, and therefore potentially conservative. Looking for a slightly larger target increases the reward-to-risk prospect of the trade; the downside is the target may be missed.

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