Please take a look at the 7-month chart of VHS (Vanguard Health Systems, Inc.) below with my added notations:
The Tale of the Tape: VHS is back below the $11 level. Long trades could be entered on a pullback down to $9, or on a break back above $11. Short trades could be made on a rally up to $11, or on a break below $9, if that were to happen.
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