Georgia Gulf Corporation is a manufacturer and international marketer of two integrated chemical product lines, chlorovinyls and aromatics. The company’s primary chlorovinyls products are chlorine, caustic soda, vinyl chloride monomer (VCM), vinyl resins and vinyl compounds, and its aromatics products are cumene, phenol and acetone. The Company operates through four segments: chlorovinyls; window and door profiles and moldings products; outdoor building products and aromatics. The chlorovinyls segment is a integrated chain of products, which includes chlorine, caustic soda, ethylene dichloride, VCM and vinyl resins and compounds. The company’s vinyl-based building and home improvement products are primarily marketed under the Royal Group brand names, and are managed within two segments, window and door profiles and moldings.
To review Georgia Gulf’s stock, please take a look at the 1-year chart of GGC (Georgia Gulf Corporation) below with my added notations:
GGC has created a couple of short-term price levels over the last 3 months. First, GGC has formed a clear resistance at $35 (navy). In addition, the stock has been climbing higher, possibly on an up-trending support level (blue), during that same period of time. These two levels combined had GGC stuck within a common chart pattern known as an Ascending Triangle. Eventually, GGC will have to break one of those (2) levels.
The Tale of the Tape: A long trade could be made on GGC if the stock breaks out through the $35 level, with a stop placed under that level. A pullback to the trendline support could also provide a potential long 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!
Christian Tharp, CMT