Trading Ranges Is A Strategy Too

Right now, the stock market can't seem to make up its mind whether to continue its recent downtrend, or to reverse at a key support area.

As long as this continues, trading breakouts and breakdowns are both rather frustrating. But there is an alternative. I'm seeing many stocks simply trading in a range, repeatedly bouncing off support and failing at resistance. On Wednesday, I provided a chart of Tractor Supply Co (TSCO), suggesting to wait to see a confirmed breakout at the 207 level. TSCO then reported earnings and fell 20 bucks and is now approaching its support in the lower 180s. Well, here's another stock that has a very well-defined range - Heartland Express (HTLD):

Enter Heartland Express (HTLD):

I like this chart. HTLD is showing nice relative strength vs. its trucking peers ($DJUSTK). Trucking is part of the strengthening industrials sector, and has been gaining vs. the S&P 500 since April. So long as its AD line hangs onto recent support, I'd look for HTLD to hang onto its support from 13.90-14.10. Just two days ago, HTLD hit 15.41 and appeared to be clearing key price resistance. Instead, it was a headfake and here we are again - right back at support. Buying at support and selling at resistance yields approximately 8% - not bad in a market that's still searching for long-term direction.

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