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This Trio Has Flow

Here are three stocks with positive Chaikin money flow indications and positive price action.
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Monitoring volume is an important aspect of technical analysis, but the direction of the underlying money flow is equally important and there are a number of ways to track it.

On-balance volume measures this buying and selling pressure by simply adding volume on up days and subtracting it on down days from a cumulative total. Accumulation/distribution measures money flow using location of the close within either the upper or lower period range as an indication of money flow.

The Chaikin money flow indicator takes an average of accumulation/distribution over a defined time, usually 20 periods, and it is the one I rely on the most in my trading. Below are three stocks with positive Chaikin money flow indications and positive price action.

After bouncing off their 50-day moving average, shares of H&R Block (HRB) broke above a downtrend line this week from a compressed price range, as reflected in the narrow Bollinger bandwidth reading at the bottom of the chart. Moving average convergence/divergence has made a bullish crossover, and Chaikin money flow is crossing above its centerline. The stock is a buy at its current level with a position size that accommodates an initial trailing stop under the 50-day moving average.

Semiconductor manufacturer Cavium Networks (CAVM) broke above its 50-day moving average this week and is testing a horizontal resistance line in the $50.00 area. The relative strength indicator and moving average convergence/divergence have crossed above their centerlines, and Chaikin money flow reflects accumulation. A close in upper candle range is a long opportunity with an initial trailing stop under the 50-day average.

Leggett & Platt (LEG) manufacturers home furnishing components. The stock has been trading in a horizontal channel for a month and this week is testing channel resistance. Price momentum indicators, as well as Chaikin money flow are crossing above their centerlines. The stock is a buy after a close above the channel top in the upper candle range, with an initial percentage stop under the 50-day average.

At the time of publication, Moreno had no positions in the stocks mentioned.