With the stock market having moved significantly higher over the past several months, most stocks have moved higher with the overall market. Although there aren’t too many stocks that haven’t rallied to some extent, there are some stocks that have maintained an overall trend lower. It never hurts to keep an eye on those stocks to see signs of a break from the downtrend. One such stock that fits that description would be that of Fluor Corporation.
Fluor Corporation is a holding company. The company, acting through its subsidiaries, is a professional services firm, providing engineering, procurement, construction and maintenance, as well as project management services. Fluor serves a diverse set of industries, including oil and gas, chemicals and petrochemicals, transportation, mining and metals, power, life sciences, and manufacturing. Fluor is also a primary service provider to the United States federal Government. It operates in five segments: Oil & Gas, Industrial & Infrastructure, Government, Global Services and Power. Fluor Constructors International, Inc., which operates separately from the rest of its business, provides unionized management and construction services in the United States and Canada, both independently and as a subcontractor on projects in each of the segments.
To review Fluor’s stock, please take a look at the 1-year chart of FLR (Fluor Corporation) below with my added notations:
FLR had formed an important trend line of resistance (red) since April of last year. Always remember that any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its importance. As you can see, FLR’s trend line had been tested (4) times, so it was definitely important to the stock. In January, the stock broke above that resistance and has moved steadily higher since. Now, the stock has approached a very important level at $60 (navy).
The Tale of the Tape: After breaking out of its downtrend in January, FLR has hit an important level of resistance at $60. A long position should be entered if FLR can break above that $60 level with a stop placed below $60.
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