Given the recent weakness in the markets, it has become an increasingly difficult task to find a stock that looks like it is positioned to make a move higher. However, one company that has been able to keep above water while others drifted lower is Atwood Oceanics Inc. (NYSE:ATW). As you can see from the chart below, the price was pushed above an influential level of resistance (shown by the horizontal trendline) on June 27. The break above $112.50 suggests that the bulls are in control of the direction and that the stock is a candidate for a move higher. The recent pullback toward the support level could prove to be a strategic entry level for the bulls and the increase in volume will be used as technical confirmation that buyers are gaining confidence in the rally. Bullish traders will likely set their stop losses below the nearby trendline to ensure they are able to get out of a position quickly in case the recent selling pressure continues. To learn more, see The Anatomy Of Trading Breakouts.

We've also added the Parabolic SAR indicator, which is a common indicator used by traders to determine strategic levels for the placement of stop-loss orders. A sell value is triggered when the price moves below the SAR, which is shown on the chart by the reversal of the dot placement from below the price to above it. A buy signal is generated when the price rises above the SAR reading. Many traders will place their stop-loss orders near the SAR value because a break beyond this level often signals a short-term shift in the stock's direction.

Related Articles
  1. Fundamental Analysis

    Calculating Valuation

    Valuation is the process of determining what an asset is worth.
  2. Chart Advisor

    Stocks at Important Technical Levels

    These stocks are breaking or holding at key support and resistance levels. How they react here impacts the direction of the price over the coming months.
  3. Technical Indicators

    Explaining Autocorrelation

    Autocorrelation is the measure of an internal correlation with a given time series.
  4. Chart Advisor

    ChartAdvisor for October 9 2015

    Weekly technical summary of the major U.S. indexes.
  5. Chart Advisor

    These Oil & Gas Stocks Have Reversed

    It's been a long downtrend for oil stock owners, but there's hope. These four oil and gas stocks have reversed and may keep trending to the upside.
  6. Chart Advisor

    4 European Stocks to Consider Buying

    European companies, listed on US exchanges, that are providing buying opportunities right now.
  7. Chart Advisor

    ChartAdvisor for October 2 2015

    Weekly technical summary of the major U.S. indexes.
  8. Investing

    How Diversifying Can Help You Manage Market Mayhem

    The recent market volatility, while not unexpected, has certainly been hard for any investor to digest.
  9. Technical Indicators

    Why MACD Divergence Is an Unreliable Signal

    MACD divergence is a popular method for predicting reversals, but unfortunately it isn't very accurate. Learn the weaknesses of indicator divergence.
  10. Chart Advisor

    Expecting a Big Breakout In These 4 Stocks

    These stocks are tightly wound following big moves, and upon breakout more big moves could ensue.
  1. What are some of the most common technical indicators that back up Doji patterns?

    The doji candlestick is important enough that Steve Nison devotes an entire chapter to it in his definitive work on candlestick ... Read Full Answer >>
  2. Tame Panic Selling with the Exhausted Selling Model

    The exhausted selling model is a pricing strategy used to identify and trade based off of the price floor of a security. ... Read Full Answer >>
  3. Point and Figure Charting Using Count Analysis

    Count analysis is a means of interpreting point and figure charts to measure vertical price movements. Technical analysts ... Read Full Answer >>
  4. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  5. How are double exponential moving averages applied in technical analysis?

    Double exponential moving averages (DEMAS) are commonly used in technical analysis like any other moving average indicator ... Read Full Answer >>
  6. How do you know where on the oscillator you should make a purchase or sale?

    Common oscillator readings to consider making a buy or sale are below 20 or above 80, respectively. More aggressive investors ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!