Even though it can often be challenging to know what trades to make and when to make them, there are those trading opportunities that are clear and obvious. Usually, the “keep it simple stupid” trades tend to be the better ones anyway. Although that doesn’t mean the trade will work out in your favor, at least you knew it was the right trade at that time. A stock with a trading opportunity that fits that description would be BCO (The Brink’s Company).
The Brink’s Company is a provider of secure logistics and security solutions, including the transportation of valuables, cash logistics and other security-related services to banks and financial institutions, retailers, government agencies, mints, jewelers and other commercial operations worldwide. Other services provided are armored transportation, ATM replenishment and servicing; network infrastructure services; secure global transportation of valuables; currency deposit processing and cash management services. Cash management services include cash logistics services; deploying and servicing safes and safe control devices; coin sorting and wrapping, integrated check and cash processing services; providing bill payment acceptance and processing services to utility companies and other billers, and guarding services, including airport security or Aviation Security.
Please review the 1 yr chart of BCO (The Brink’s Company) below with my added notations:
BCO has been trading mostly sideways for the last 8 months. During that time the stock has been holding a very important level of support at $22 (navy). No matter what the market has or has not done over the last 8 months, BCO has not broken below $22. However, the stock’s series of lower highs (blue) over the last 6 months is a concern considering the overall stock market has moved higher during that time.
The Tale of the Tape: BCO has a very important support at $22. A long trade could be made on a pullback to $22 with a stop placed under that level. However, the stock appears to be preparing to break lower, and if it does, a short trade should be made with a stop placed above $22.
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