Todays Big Stock: Celanese (NYSE: CE)

With the recent uncertainty in the stock market, I encourage readers to focus on the strongest stocks when given the opportunity. Stocks that have maintained their trend higher through the current market setback will most likely be the ones that hold their ground better during any future pullbacks. One such stock outperforming the market is that of Celanese Corp.

Celanese is a technology and specialty materials company. The company is a producer of acetyl products, which are intermediate chemicals, for industries, as well as a global producer of engineered polymers that are used in a variety of applications. Celanese’s product portfolio includes paints and coatings, textiles, automotive applications, consumer and medical applications, performance industrial applications, filter media, paper and packaging, chemical additives, construction, consumer and industrial adhesives, and food and beverage applications.

To review Celanese’s stock, please take a look at the 1-year chart of CE (Celanese Corp) below with my added notations:

CE has been in a nice up trend all year and has recently hit a new 52-week high near $56. Along the way, CE has formed a nice trend line support level (blue). Always remember that any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its importance. In June, CE confirmed the importance of the trend line I have drawn. After hitting a new high last week, CE appears to be pulling back, possibly to the trend line.

The Tale of the Tape: CE has been trending higher all year. Along the way it has created a nice trend line of support. A long position could be entered on a pullback to the trend line, while a short position might be entered if CE broke the trend line support. A trader could also enter a long position on a move above $55.

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!

Good luck!
Christian Tharp, CMT