Gilead Sciences Inc. (GILD) is a $42 billion biopharmaceutical company that was up 2.4% on Monday (though it has come back down almost 2% Tuesday) and has next resistance from 2008 at $57.63.

• GILD has closed above the weekly Starc+ band for the past two weeks; it is also now trading well above the monthly Starc+ band at $51.55
• The relative performance has completed a major bottom, moving through two-year resistance, line b, in the middle of January
• The OBV has also overcome its resistance at line c, but it is lagging the price action
• First real support is in the $50 area, which is 12% below Monday’s close; further support stands at $47.50 with major support, line a, in the $44 area

Seagate Technology (STX) is an $11.2 billion data storage company that is up over 60% so far this year. The company increased its dividend by 39% on Jan. 26 and the stock currently yields 3.8%.

• STX is trading well above its weekly Starc+ band again this week and is 18% above the monthly Starc+ band
• The RS line broke through strong resistance (line e) in early November and then reaffirmed the breakout in early January when STX moved through resistance at line d
• Volume was very heavy last week, and while the OBV has moved through its downtrend, line f, it is still below the early-2010 highs
• The midpoint of last week’s range is at $23.50 with first real chart support at $21.50
• There is more important weekly support at $18.40 and the weekly Starc- band

What It Means: Managing risk is a key factor in successful investing or trading. For example, early bulls on STX are not yet showing any caution, as they are looking to roll their existing options into higher strike prices. Of course, they may turn out to be absolutely right, but they are equally likely to give up some nice gains.

Let's say you are considering buying STX at last Wednesday's closing price of $25.53, which is 3.2% below Monday's close. The tightest reasonable stop, in my opinion, would be under $20.50, which was last week's low. If you went long at $25.53 and were stopped out at $20.50, it would be a 19.7% loss. It would take a move to the $40 area to make the potential reward three times the risk.

The Starc band analysis clearly suggests that all three of these stocks are more likely to either start moving sideways or correct in the next month or so.

In June 2011, I noted that several tech giants, including NetFlix Inc. (NFLX), could fall further, as they were above their weekly Starc+ bands.

How to Profit: The strong relative performance patterns in these three stocks makes them worth watching on any corrections. Here are key support levels for each:

• CA: Support at $23.25 to $24
• Gilead Sciences: Support at $45.50 to $48
• Seagate Technology: Support at $18 to $19.50