Trading in the stock market can be complicated, especially if we make it that way. It can be challenging to know what trade to make and when to make it. However, there are some trading opportunities that are clear and somewhat obvious. Usually, the “keep it simple” trades tend to be the best. Of course, simple or not, that doesn’t mean the trade will always work out in your favor. But, at least you knew it was the right trade at that time.
UTi Worldwide Inc. is a holding company. UTi is an international, non-asset-based supply chain services and solutions company that provides services through a network of offices and contract logistics centers. Its primary services include air and ocean freight forwarding, contract logistics, customs brokerage, distribution, inbound logistics, truckload brokerage and other supply chain management services, including consulting, the coordination of purchase orders and customized management services. As of year-end 2010, it operated a global network of freight forwarding offices and contract logistics and distribution centers in a total of 62 countries. UTi’s business is managed from principal support offices located in Long Beach, California, and several other locations worldwide.
To analyze UTi’s stock for potential trading opportunities, please take a look at the 1-year chart of UTIW (UTi Worldwide, Inc.) below with my added notations:
UTIW experienced a rough slide from May thru August. While moving in a mostly sideways move from August through January, UTIW created a strong resistance at $16 (navy). Late last week, the stock finally broke through that resistance level. As expected, the previous $16 resistance has already provided support to the stock. Unless the market sells off drastically, UTIW should be moving higher from here.
The Tale of the Tape: Now that UTIW has broken above $16, the stock should be headed higher. A long trade could be entered on a pullback to that $16 level with a stop placed below $16. If UTIW were to break back below $16, a short trade might be entered instead and the forecast for a move higher would be negated.
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