Dorman Products (DORM) touched price support near 51.00, which is technically significant as DORM has been trading in a continuation pattern for the past several weeks and 51.00 has marked flag support. There was a prior uptrend (flag pole) in play off the February low and DORM longs have been patiently awaiting the next push higher. Unfortunately, the flag has been dominating the action and frustrating traders since the March 21st high. Here's a look:
The flag and sideways consolidation began after a negative divergence printed in March. This period of consolidation has aided DORM in the sense that its MACD has reached centerline support and its RSI is now close to 40 - both of which are generally solid entry points into an uptrending stock. Price support at 51.00 is important, however, so a closing stop beneath that level should be considered.
Happy trading!
Tom
