Whenever I review a stock above the $50-55 price range, I have tried to get into the habit of following up with a similar stock with a lesser $$ amount. Yesterday’s newsletter included CSTR, which was in that $50+ range. So, today I will be looking at a stock in the same industry, but that is less expensive: Steelcase, Inc. (SCS)
Steelcase, Inc. deals primarily in providing the work experience in office environments. Steelcase Inc. services customer needs through three core brands: Steelcase, Turnstone and Coalesse. The primary focus of these brands is in office furniture, but it also serves needs in areas like healthcare, education and distributed work. Steelcase Inc. markets products and services to customers, primarily through a network of independent dealers, around the globe and has sales, manufacturing and administrative operations in North America, Europe and Asia.
Before discussing the potential trading opportunities with SCS (Steelcase, Inc.), please review the 1 yr. chart of SCS that I have outlined below, with my added notations:
SCS has recently approached its 52-week high of $12. Along the way, SCS has demonstrated a pattern of treating each whole dollar amount as an important area of support and/or resistance. Notice how nearly every time SCS hits $10 (pink) and $11 (red) it finds support or resistance there. Currently, the stock is holding $11 and is potentially getting ready to make another run for a 52-week high breakout through the $12 resistance.
The Tale of the Tape: SCS has stair stepped its way towards a new 52-week high. $10, $11 and $12 have all proved themselves to be important to the stock. A long position could be entered now at $11 or on a breakout above $12. The longer-term trader may prefer to wait for the breakout, while short-term traders will need to “thread the needle” carefully due to SCS’s limited runs of $1 at a time. However, a $1 gain on SCS can quickly turn into a $2 gain if entered at the right time.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT