Autodesk, Inc. is a design software and services company. Autodesk serves customers in the architecture, engineering and construction; manufacturing, and digital media and entertainment industries. It operates in four segments: Platform Solutions and Emerging Business, Architecture, Engineering and Construction, Manufacturing and Media and Entertainment. Its PSEB, AEC and MFG segments derive revenue from the sale of licenses for software products and services to customers who design, build, manage or own building, manufacturing and infrastructure projects. The principal software products of these segments include the general design software, including AutoCAD and AutoCAD LT; design software, including AutoCAD-based products, model-based design software, including Autodesk Inventor products, Autodesk Revit products, AutoCAD Civil 3D, and Autodesk Moldflow.
To analyze the stock of Autodesk, please take a look at the 1-year chart of ADSK (Autodesk, Inc.) below with my added notations:
Over the last (6) months, the stock has seemed to find support or resistance on or at the increments of $5. First, notice the $35 topside resistance (navy), which was also previous support. Next, you can see the common $30 level (red, green) and the bottom level of $25 (blue). The great thing about ADSK is that it shows you how to trade it no matter what direction the market moves. If you like the short side of the market, you could either short ADSK on rallies up to a $5 level or on any breakdowns of them. If you want a long play instead, you could buy ADSK on a pullback to a $5 level or on any breakout through one of those levels.
The Tale of the Tape: ADSK finds the levels of $5 important. These price points always appear to act as either support or resistance and sometimes both. If ADSK rallies back up to $35, you could enter a short play. If it breaks back above $35, you could enter a long play. You could also buy ADSK if it comes down to $30, or short the stock if it breaks that $30 support. Etc., etc., etc!
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