Xylem (XYL) is near the bottom of the alphabet, but with an attractive looking chart, you might want to move it towards the top of the shopping list.
Looking at this daily chart of XYL, above, we get a sense of a stock that wants to move higher. XYL has had three or four good attempts to breakout over $38. The On-Balance-Volume (OBV) line has been in a sideways trend from August until now, but that could be changing.
The pace of trading has picked up in the new year -- volume looks like it is higher in January and February, and this should soon turn the OBV line to the upside. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line, which is a positive. Prices for XYL are above the rising 50-day moving average and above the flat 200-day average.
This three-year weekly chart of XYL (above) is bullish with an upper case 'B'. The price chart shows the 2014 attempts in the $38 to $40 area, while the daily chart shows $38 as the resistance. On this timeframe, the OBV line has been rising since 2013.
Two years of more aggressive buying/accumulation should overcome whatever selling keeps emerging at $38. Prices are positioned for an upside breakout, with the MACD oscillator above the zero line and prices above the 40-week moving average.
When we break out, how far might XYL travel?
This point and figure chart, above, just plots price reversals and filters out small "jiggles" so that breakouts and breakdowns are clear. For XYL, the breakout is $39 and perhaps more exciting is the price projection of $50.
Balancing the risk, we would use a sell stop at $36 after getting long at the $39 breakout point.