PNM Resources, Inc. is an investor-owned holding company of energy and energy-related businesses. Its subsidiaries are Public Service Company of New Mexico and subsidiaries, Texas-New Mexico Power Company (TNMP) and subsidiaries and Power, L. P. and subsidiaries (First Choice). PNM is a public utility with regulated operations engaged in the generation, transmission and distribution of electricity and the transmission and distribution and sale of natural gas. TNMP is a regulated utility providing regulated transmission and distribution services in Texas. First Choice is a retail electricity provider operating in Texas. PNMR owns 50% of Optim Energy, which is focused on unregulated electric operations within the areas of Texas covered by Electric Reliability Council of Texas, including the development, operation and ownership of diverse generation assets and wholesale marketing.
Before discussing the potential trading opportunities with PNM (PNM Resources, Inc.), please review the 1 yr. chart of PNM that I have outlined below, with my added notations:
As you can see from the chart above, PNM can find support and/or resistance at each $1 increment. Most recently, the stock has bounced at $16, $17 and then $18.
Lastly, there are (3) levels that appear to be more important than others though: $13 (l. blue), $15 (maroon) and $17 (red). The break above $17 in October was also a 52-week high breakout that so far has led to a 10%+ run-up. Could the next $2 increment, $19, be the next “more important” level?
The Tale of the Tape: PNM reacts to each $1 increment, but the odd dollar amounts seem to be more important. A pullback to $18 could be an opportunity to enter a long trade, but since a trader might expect $19 to be tough to get through at first, the better trade might be to wait for a pullback to $17. Either way, a stop should be placed below the level of entry.
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