Don't Ignore This Chart!

Dorman Bounces Off Flag Support

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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

Tom Bowley
About the author: is the Chief Market Strategist at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
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