Today’s Big Stock: Tenneco Inc. (NYSE: TEN)

Tenneco Inc. is a producer of emission control and ride control products and systems for light, commercial and specialty vehicle applications. The company serves both original equipment vehicle manufacturers (OEMs) and the repair and replacement markets, or aftermarket, worldwide. Tenneco designs, manufactures and sells emission control and ride control systems and products for light, commercial and specialty vehicle applications. It serves the OEMs and replacement markets worldwide through brands, including Monroe, Rancho, Clevite Elastomers, Marzocchi, Axios, Kinetic, and Fric-Rot ride control products and Walker, Fonos, DynoMax, Thrush, and Lukey emission control products. As a parts supplier, the company produces individual component parts for vehicles, as well as groups of components that are combined as modules or systems within vehicles.

To analyze Tenneco’s stock for potential trading opportunities, please take a look at the 1-year chart of TEN (Tenneco, Inc.) below with my added notations:

The first level to notice is the $35 level (navy) that was a key resistance in August and October. Now that TEN is above that resistance, the same $35 is acting as support. Next, you can see the current $40 resistance (red) that TEN has formed over the last (2) months. Below the $35 level is the common $30 level (green).

The nice thing about TEN is that it shows you how to trade it no matter what direction the market moves. If you like the short side of the market, you could either short TEN on rallies up to a $5 level or on any breakdowns of them. If you want a long play instead, you could buy TEN on a pullback to a $5 level or on any breakout through one of those levels.

The Tale of the Tape: If TEN rallies back up to 40, you could enter a short play. If it breaks above $40, you would certainly want to enter a long play. You could also buy TEN if it comes back down to the $35 level, or short the stock if it breaks that $35 support. If the stock were to break below $35, the $30 level would come back into play for a trade as well.

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