When selecting stocks to build your watch list, make sure to pick plenty of stocks with multiple trading opportunities. Yesterday’s Big Stock, SOA, has one great trade if it breaks out. However, most of the stocks I watch have upcoming trades regardless of market direction. One stock that fits that description would be that of UTi Worldwide, Inc.
UTi Worldwide Inc. is an international, non-asset-based supply chain services and solutions company that provides services through a network of offices and contract logistics centers. Its primary services include air and ocean freight forwarding, contract logistics, customs brokerage, distribution, inbound logistics, truckload brokerage and other supply chain management services, including consulting, the coordination of purchase orders and customized management services. Uti operates a global network of freight forwarding offices and contract logistics and distribution centers in a total of 62 countries. The company’s business is managed from principal support offices located in Long Beach, California, and several other locations worldwide.
Please take a look at the 1-year chart of UTIW (Uti Worldwide, Inc.) below with my added notations:
UTIW had a very important price level at $18 (purple) that it broke in July. The stock eventually found support at $12 (green) and seems to have a 3-month resistance at $16. After seeing $18, $16, and $12 as price levels, it makes you wonder if $14 has been important as well. As you can see, $14 (blue) has popped up as support and resistance a couple of times over the last 3 months. So, in addition to showing clear levels of support/resistance, UTIW is also showing us that it tends to react to each $2 increment.
The Tale of the Tape: After breaking below its $18 level and falling to $12, UTIW is currently trading between its $14 and $16 levels. A long position could be entered at $14 or on a break above $16 with a stop below the level of entry. If UTIW breaks below $14, another long play could be made at $12. If you are looking for short trades instead, a break below $14 and/or $12 will provide you with those opportunities.
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