The last couple of days in the market have seen some significant drops, yet again. As a result, you should probably be noticing that a lot of stocks in your watch list are breaking below key levels. This is not a bad thing at all, rather just new opportunities presenting themselves! One stock that I’d like to review for those potentially new opportunities is that of Itron Inc.
Itron, Inc. is a technology company, offering end-to-end smart metering solutions to electric, natural gas, and water utilities around the world. Itron’s metering solutions, meter data management software, and knowledge application solutions bring additional value to a utility’s metering and grid systems. Its professional services help its customers project-manage, install, implement, operate, and maintain their systems. The company classifies metering systems into three categories: standard metering, advanced metering systems and technology, and smart metering systems and technology.
Before discussing the potential trading opportunities with ITRI (Itron, Inc.), please review the 1 yr. chart of ITRI that I have outlined below, with my added notations:
After breaking below its key level of $50 (brown), ITRI fell into a consolidation zone between the $35 level (green) and the $40 level (red). As with a lot of stocks, ITRI broke its $35 support this week and is continuing lower as expected. Based on the stock’s history of developing key levels at the increments of $5 and $10 ($35, 40, 50, etc.), I would expect the next level of support for ITRI to be at $30.
The Tale of the Tape: ITRI has broken its previous level of support at $35 and is moving lower. Based on the stock’s history, and your stance on the market at that time, a long trade could be entered at $30 with a stop below that level. On any potential rallies, a short position could be entered at $35 with a stop placed above that level.
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