Todays Big Stock: TD Ameritrade Holding Corporati (NasdaqGS: AMTD)

As I often state in my newsletters, it never hurts to have stocks in your watch list that present you with trading opportunities regardless of what direction the market heads. One such stock that fits the description of giving you a trade either way would be that of TD Ameritrade Holding Corporation.

TD Ameritrade Holding Corporation is a provider of securities brokerage services and technology-based financial services to retail investors, traders and independent registered investment advisors. TD Ameritrade provides services through the Internet, a national branch network and relationships with RIA’s (registered investment advisors).

To review TD Ameritrade’s stock, please take a look at the 1-year chart of AMTD (TD Ameritrade Holding Corporation) below with my added notations:

AMTD has created a couple of short-term price levels over the last (2) months. First, AMTD has formed a clear support level at $15 (green). In addition, the stock has also been forming a down trending resistance level (red), which it has now tested (4) different times. These two levels combined have AMTD stuck within a common chart pattern known as a Descending Triangle that will eventually have to break one way or another.

The Tale of the Tape: AMTD is currently stuck between two very important levels for the stock: The down trending resistance and the $15 support. A long trade could be made on a break above the down trending resistance with a stop placed under the breakout point. On the other side, you could enter a short trade on AMTD if the stock breaks below the $15 support level. In that case, a stop should be placed above 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!

Good luck!
Christian Tharp, CMT