The market is still overbought, so I am not looking to enter any long positions just yet. However, HPQ has formed a nice pattern and is nearing an ideal entry.
Setup: Breakout pullback. Yesterday the stock broke out over price resistance on strong volume. Today’s pullback was on lower volume and help up quite well considering the overall market. A few more days of low volume pullback to the bottom of the breakout bar would provide a low risk entry.
Risk: Entry at $37.15, with a stop at $36.50 and target at $39 provides a 2.8 to 1 reward to risk.
Note: Pullback *must* be orderly and on low volume. Strong gaps down or big price bars negate setup.