Keeping an Eye Out for Breakouts

We've been mired in a bear market throughout 2022, but that doesn't mean we shouldn't be doing our homework, preparing for a reversal in key stocks, industry groups, sectors, and major indices.

Many stocks are consolidating, failing to break above key price resistance levels. Tractor Supply Co (TSCO) was featured approximately three months ago here in the EB Digest and it remains in a multi-month consolidation pattern with a trading range from 182-207. Check this out:

Enter Tractor Supply Co (TSCO):

We haven't seen the breakout just yet, but there's a lot to like on this chart. The PPO is as strong as it's been in months. The AD line has been consistently rising, even while price action simply moves sideways. The specialty retail group ($DJUSRS), while not exactly on fire, remains above its May low, something the S&P 500 wasn't able to do. As a result, the $DJUSRS:$SPX relative strength line has been steadily rising since May. Finally, TSCO is soaring relative to specialty retailers as a whole.

What does this mean?

• All of these signals are telling me that if TSCO is finally able to make the price breakout above 207, other technical indicators are lining up to support and confirm this move.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.