Owens Corning Inc. is a producer of glass fiber reinforcements and other materials for composites and of residential and commercial building materials. The Company’s products range from glass fiber used to reinforce composite materials for transportation, electronics, marine, infrastructure, wind-energy and other markets to insulation and roofing for residential, commercial and industrial applications. It operates in two business segments: Composites, which includes its reinforcements and downstream businesses; and building materials, which include its insulation, roofing, and other businesses. During the year 2010, Owen’s composites and building materials segments accounted for approximately 37% and 63% of its total segment net sales.
Please take a look at the 1-year chart of OC (Owens Corning Inc.) below with my added notations:
Over the last 5 months, OC has formed a very important price level to watch at $30. As you can see from the chart above, $30 was a strong resistance (red) from August through December. Also, prior to breaking above the $30 level in January, $25 (navy) had been a very common level of support.
The Tale of the Tape: OC has formed an important price level at $30. A long trade could be placed on any pullbacks to the $30 level with a stop placed under that level. IF the stock were to break below $30, a short trade would be advised in expectation of a drop back down to $25 where a long trade could then be entered.
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