Filed Under:
Tickers in this Article: GRA, SXT, TORM, IOSP
One tactic traders should always have in mind when scanning for stocks is to look for stocks in the same sector acting in unison. Institutions are responsible for the vast majority of stock movement and it is always in the best interest of a retail trader to trade in the same direction as them. Typically when an institution accumulates a stock, it does so for several days or weeks. Many institutions also diversify by trading in baskets of stocks, which helps spread out the buying across many stocks in the same sector.

TUTORIAL: Analyzing Chart Patterns

One group that has been performing well recently is the Specialty Chemicals sector. W.R. Grace & Co. (NYSE:GRA) has been steadily rising throughout the past few weeks and has now broken above its base. The base had been taking the shape of a megaphone (broadening ) and while GRA spiked above $46 once before, the line of resistance was clearly near the $42 area. This would be the level for traders to watch in the case of a possible breakdown. (For related reading, see The Anatomy Of Trading Breakouts.)




Sensient Technologies Corporation (NYSE:SXT) is another stock in this sector that has a good looking chart. SXT has also been trading in a broadening base, as it meanders between $35 and $39. SXT found support at a much higher level than before, as it rebounded off its 50-day moving average. This would be the new line in the sand to watch in case of weakness. Looking above, the July highs could prove to be pivotal area for bulls. A move above the July highs would certainly be construed as bullish.




TOR Minerals International Inc (Nasdaq:TORM) is a stock in this group that has already moved out of the channel it has been using to consolidate. While it is still well below its recent highs, the recent breakout is a positive. TORM is now consolidating in a tight range above its 20 and 50-day moving average. Any strength that carries TORM above $19 should lead to a retest of the March highs. (For more, see Channel Breakouts With The CCI.)




Rounding out the group is Innospec Inc. (Nasdaq:IOSP). IOSP hasn't cleared its base, or set higher highs as it trades in a broadening pattern, but it does have a very solid base. IOSP has been drifting back towards the $30 area but could be finding support. The level to watch for bulls is the July highs. Any strength that holds above this area would likely lead to new all time highs for IOSP.




While the catalyst remains unknown to me, it is clear that this group has been getting some buying support. Whether these stocks are under accumulation remains to be seen, but the near-term action has certainly been a positive. Traders should keep an eye on resistance levels just above, because if there is any market strength at all, it would likely lead to new highs for these stocks. (For additional reading, also take a look at Blending Technical And Fundamental Analysis.)

Charts courtesy of stockcharts.com

At the time of writing, Joey Fundora did not own shares in any of the companies mentioned in this article.

comments powered by Disqus
Trading Center