Chart of the Day: MSC Industrial Direct (MSM)

When looking at the charts, I spotted a horizontal channel forming in MSC Industrial Direct Co. (MSM) since the end of May.  MSM distributes metalworking and maintenance, repair, and operations products in the United States, Canada, Mexico, and the United Kingdom.

A horizontal channel occurs when…

an asset’s, in this case a stock, price is ranging within a sideways support and resistance zone.

Channels are used by technical analysts to identify areas where breakout trades could form.  A breakout is when the price of an asset moves above a resistance level or below a support level.  A breakout to the upside signals traders to buy the asset or cover short positions, while a breakout to the downside signals traders to get short or sell long positions.

Let’s take a look at the 1-year chart of MSM with added notations…

See chart and continue reading at STOCKNEWS.com