Yesterday, we looked at a monthly chart of Eversource Energy, noting the stock has been on a bullish run since July 2018.
Today’s Chart of the Day is a Keltner Channel Chart for Campbell Soup Co. (NYSE: CPB).
Campbell Soup Company, together with its subsidiaries, manufactures and markets food and beverage products. It operates through Meals & Beverages and Snacks segments.
Now, the Keltner Channels serve as an overbought/oversold indicator. When the daily stock price is trading above the upper Channel, it signals that the stock is overbought. When a stock becomes overbought, it normally declines in price as the inevitable profit taking occurs.
Stocks in a price uptrend do not advance in a straight line. There are always price retracements along the way.
Below is a daily price chart for Campbell Soup Co. along with the three Keltner Channels (Upper, Middle, and Lower).
The CPB daily price chart shows that CPB is in a strong price uptrend and recently became overbought many times as the stock traded above the Upper Keltner Channel (circled in blue). As you can see, after trading above the Upper Channel in all scenarios, CPB experienced a pullback.
Yet in all cases where CPB experienced the pullbacks, the stock always continued to rally afterwards.
If you want to participate in this rally, where is the best place to enter?
We use the Keltner Channels to help us select a lower-risk entry point.
A Keltner Channel “Buy Zone” occurs when a stock is trading below the Upper Keltner Channel. Once the daily price is trading below the Upper Channel, it signals a buying opportunity.
If you had purchased CPB shares when CPB entered the “Buy Zone” around June 28th, you’d be up 26.3% on the stock by now.
Knowing that CPB shares are continuing to rise, experience pullbacks, and rally again, we’ll be paying attention to future pullbacks in order to get in at the lowest entry point.
Editor, Chart Of The Day