Is Hershey Setting up for a Break Out?

Published on Wednesday, 01 September 2010 07:28 Written by Danny Miller

New York, September 1st (TradersHuddle.com) - Shares of Hershey Company (NYSE:HSY) closed the trading session at $46.47 placing the price action in a very tight range, given that calculated support is set at $45.60 and the calculated resistance based on an algorithm of peaks and troughs is set at $47.96

Hershey Company (NYSE:HSY) manufactures chocolate and sugar confectionery products. The Company's principal products include confectionery and snack products; gum and mint refreshment products; and food and beverage enhancers such as baking ingredients, toppings and beverages.

Hershey'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 Hershey's price action, as any movement outside its predefined range of $45.60 and $47.96 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 $45.60 could spark above average selling. A tiered approach can be a good way to approach starting a position in Hershey'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.