To review Stone Energy’s stock, please take a look at the 1-year chart of SGY (Stone Energy Corporation) below with my added notations:
The Tale of the Tape: SGY recently broke above its $30 resistance. This level should now act as support if the stock pulls back. A long trade could be made on a pullback to the $30 level, with a stop placed under that level. A break back below $30 would negate the forecast for a move higher and a short trade should be considered.
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