Allegheny Technologies Inc. (NYSE: ATI )

Allegheny Technologies Incorporated is a diversified specialty metals producer. The company’s products include titanium and titanium alloys, nickel-based alloys and super-alloys, zirconium, hafnium and niobium, advanced powder alloys, stainless and specialty steel alloys, grain-oriented electrical steel, tungsten-based materials and cutting tools, carbon alloy impression die forgings, and large grey and ductile iron castings. ATI’s specialty metals are produced in a range of alloys and product forms. The company operates in three segments: High Performance Metals Segment, Flat-Rolled Products Segment and Engineered Products Segment.

Please take a look at the 1-year chart of ATI (Allegheny Technologies Incorporated) below with my added notations:

Over the last 5 months, ATI has formed (2) very important levels to watch.  The $50 resistance (navy) has been tested on multiple occasions. In addition, the $42.50 level (green) has been a very common support level, as well as a resistance (red) briefly while ATI was under it.

ATI has been consolidating between those levels for the past (2) months and will have to break up or down eventually, just as it did back in September. Although there’s no way to know which direction the stock will break, it is certainly worth putting in a watch list to monitor until it does.

 

The Tale of the Tape: ATI has been bouncing between the $42.50 and $50 levels for a couple of months now. The trades here are simple: Enter a long trade on a pullback to $42.50 or on a breakout above the $50 level. Traders could also enter a short play on a rally up to $50 or on a breakdown below the $42.50 level. Remember, there’s nothing saying you can’t go long and short on the same stock!

 

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