Quest Diagnostics Inc (NYSE: DGX)

Quest Diagnostics Incorporated provides diagnostic testing information and services in the United States and internationally.

Take a look at the 1-year chart of Quest (NYSE: DGX) below with added notations:

1-year chart of Quest (NYSE: DGX)

Over the past two months, DGX had fallen into a sideways trading range. While in the range, the stock formed a common pattern known as a rectangle. The pattern created a resistance at $96 (blue), which had also been prior support, and a $90 support (green). At some point the stock had to break one of the two levels, and last week it broke above the $96.

The Tale of the Tape: DGX is pulling back to its prior rectangle resistance. The possible long positions on the stock would be on a test of $96. The ideal short opportunity would be on a break back below that level.

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