Today’s Big Stock: Medifast, Inc (NYSE: MED)

Medifast, Inc. is engaged in the production, distribution, and sale of weight management and disease management products and other consumable health and diet products. The product lines include weight and disease management, meal replacement, and vitamins. The company offers a range of weight and disease management products under the Medifast and Essential brand and for select private label customers. The Medifast line includes Medifast 55 Shakes, Medifast 70 Shakes, Medifast Plus for Appetite Suppression Shakes, Medifast Plus for Women’s Health Shakes, Medifast Plus for Diabetics Shakes, Medifast Plus for Joint Health Shakes, Medifast Plus for Coronary Health Shakes and Essential 1 Calorie Burn Drinks. The company’s operations are primarily conducted through five of its wholly owned subsidiaries: Jason Pharmaceuticals, Inc., Take Shape for Life, Inc., Jason Enterprises, Inc., Jason Properties, LLC and Seven Crondall, LLC.

To review Medifast’s stock, please take a look at the 1-year chart of MED (Medifast, Inc.) below with my added notations:

MED has created a couple of important price levels to watch. First, MED has formed a clear resistance at $18 (navy), which would also be an 8-month high breakout if MED could manage to move above it. In addition, the stock is climbing a short term, up-trending support level (blue) over the last 4+ months. Eventually, the stock will have to break one of those (2) levels.

The Tale of the Tape: MED has an up trending support and a clear $18 resistance level to watch. A long trade could be made on a pullback to the support, or on a break above $18. A break below the up trending support would be an opportunity to enter a short trade.

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!

Good luck!

Christian Tharp, CMT