PerkinElmer Inc. (NYSE: PKI)

When it comes a stock hitting a 52-week high, I prefer to look for ones hitting a “new” high. In my view, that would be a stock that hasn’t hit a new 52-week high in quite some time, and more importantly, I want the stock to have broken through a key area of resistance. This way I know that it wasn’t just any move higher, it was an important breakout.

PerkinElmer, Inc. provides technology, services, and solutions to the diagnostics, research, environmental, industrial, and laboratory services markets worldwide. The company operates in two segments, Human Health and Environmental Health. The Human Health segment develops diagnostics, tools, and applications to help detect diseases earlier, as well as accelerate the discovery and development of critical new therapies. This segment provides early detection for genetic disorders from pre-conception to early childhood, as well as digital x-ray flat panel detectors and infectious disease testing for the diagnostics market. The Environmental Health segment offers technologies and applications to facilitate the creation of safer food and consumer products, secure surroundings, and efficient energy resources. This segment provides analytical technologies that address the quality of environment, sustainable energy development, and ensure safer food and consumer products and analytical instrumentation for the industrial market.

To review PerkinElmer’s stock, please take a look at the 1-year chart of PKI (PerkinElmer, Inc.) below with my added notations:

1-year chart of PKI (PerkinElmer, Inc.)

PKI has stalled since March while running into a $28 resistance (red). The $28 level is a clear resistance level that would signify an important 52-week high breakout if PKI could manage to break above it. IF that were to happen, the stock should probably be heading higher overall. You will also notice the lower levels of $26 (blue) and $24 (green) that could become significant if PKI pulls back instead.

The Tale of the Tape: PKI has formed a key resistance level at $28, which would be a 52-week high breakout if the stock can break above it. A long trade could be entered if PKI breaks above $28, or pulls back to $26, with a stop set below the level of entry.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT