Rally, rally, rally!! Thanks to the market’s recent rally, a lot of stocks are now moving back above key levels that they had previously broken below. This should be a sign of higher prices for those stocks, even if those moves are only temporary. One stock of many that has broken back above resistance would be that of Gentex Corporation.
Gentex Corporation designs, develops, manufactures and markets products employing electro-optic technology: automatic-dimming rearview automotive mirrors with electronic features and fire protection products. The Company also developed and manufactures windows for the aircraft industry and non-automatic-dimming rearview automotive mirrors with electronic features. Gentex manufactures electro-optic products, including automatic-dimming rearview mirrors for the automotive industry and fire protection products for the commercial building industry. The company also manufactures dimmable windows for the aircraft industry and non automatic-dimming rearview automotive mirrors with electronic features for the automotive industry.
Please take a look at the 1-year chart of GNTX (Gentex Corporation) below with my added notations:
GNTX has a long-term price level of importance at $22 (green) and another important “area” at $26 (red). After breaking below the $26 level in August, GNTX found support at its $22 level. GNTX consolidated for about (2) months between those levels of $22 and $26. Earlier this week, the stock broke back above the $26 area. Since a market pullback could be approaching, traders should watch GNTX for a possible pullback to $26.
The Tale of the Tape: Now that GNTX is back above $26, that level should act as support on any pullbacks. If that does in fact happen, a long trade at $26 with a stop below that level would be advisable. However, if GNTX were to break back below $26 the $22 level might come back into play for a long trade.
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