Range Tightening in Quanta Services

Published on Tuesday, 24 August 2010 06:24 Written by Danny Miller

New York, August 24th (TradersHuddle.com) - Shares of Quanta Services, Inc. (NYSE:PWR) closed the trading session at $18.69 placing the price action in a very tight range, given that calculated support is set at $18.56 and the calculated resistance based on an algorithm of peaks and troughs is set at $19.65

Quanta Services, Inc. (NYSE:PWR) provides specialized contracting services to electric utilities, telecommunication and cable television operators, and governmental entities. The Company also installs transportation control and lighting systems and provides specialty electric power and communication services for industrial and commercial customers.

Quanta's stock price action indicates that both sellers and buyers are materializing very close to each other, which is indicative to a momentum building area, as the stock can resolve by breaking out of the tight range that developed.

Traders wanting to establish a position should place close attention to Quanta's price action, as any movement outside its predefined range of $18.56 and $19.65 could grab the attention of momentum buyers, looking for a big movement in the price of the stock. Traders need to be aware that tight range resolution works both ways, hence, a move below support at $18.56 could spark above average selling. A tiered approach can be a good way to approach starting a position in Quanta's, by establishing a starter position while the stock is in the tight range, and then adding to the position as it breaks and closes above resistance.