Don't Ignore This Chart!

KIM at lower boundary of trading range


One of the names that popped up today on my alert for potential "Turtle Soup" setups is KIM. After opening up the chart for further inspection I noticed an interesting situation.

It is very clear that the stock is in a trading range since June. The upper boundary around $ 17.25 has been tested a few times and so has the lower boundary that shows up near $ 15.50. With yesterday's low at $ 15.74, KIM is testing that lower boundary again at the moment.

What makes the chart interesting is the fact that the trigger for a TS(+1) buy for today is a few ticks above $ 16.09 which is the low of 9/24.

Resuming the rules for the setup. Today must make a new 20-day low (that happened yesterday) and the previous 20-day low must be at least four days prior (that was$ 16.09 on 9/24). The buy signal is triggered when either on the day of the new low (that was yesterday) or the day after, that is TODAY, the price rises back above that previous 20-day low (+ a few ticks). Let's peg that "few ticks" at $ 16.20 and watch if today 10/4 KIM will be able to rally above $ 16.20 and continue that move.

If that happens we'll have a test of the lower boundary of the range in combination with a TS buy-trigger. That combination definitely looks like a tradable opportunity.

Remember: Initial stop goes just below YESTERDAY's low ($15.74) and should be trailed higher as the position becomes profitable.

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Julius de Kempenaer | RRG Research
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Julius de Kempenaer
About the author: is the creator of Relative Rotation Graphs™. This unique method to visualize relative strength within a universe of securities was first launched on Bloomberg professional services terminals in January of 2011 and was released on in July of 2014. After graduating from the Dutch Royal Military Academy, Julius served in the Dutch Air Force in multiple officer ranks. He retired from the military as a captain in 1990 to enter the financial industry as a portfolio manager for Equity & Law (now part of AXA Investment Managers). Learn More
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