For today’s article I thought I’d look back at a previous article I wrote on the stock SYK, Stryker Corporation. Please review this article.
In that article, the recommendation was “a trader could enter a long position at the $45 support or a short position on a rise to $50” or “a long trade could be made if SYK were to break above $50 or a short position if the stock breaks below $45”.
Now, let’s take a look at the updated, 1-year chart of SYK (Stryker Corporation) with my added notations and what has happened since I wrote the article:
First, SYK has continued to maintain its Rectangle pattern. More importantly, did you take advantage of the (2) short opportunities at $50 that occurred over the last (2) months? How about the long play at $45 back in November?
The Tale of the Tape: Just as stated in the previous article on SYK, the stock has formed a very common chart pattern know as a Rectangle. This pattern shows clear breakout and breakdown points for a potential long or short position. For SYK, a trader could enter a long position at the $45 support or a short position on a rise to $50. A long trade could also be made if SYK were to break above $50 or a short position if the stock breaks below $45.
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