Eastman Chemical Company, a chemical company, engages in the manufacture and sale of chemicals, plastics, and fibers in the United States and internationally. The company operates in four segments: Coatings, Adhesives, Specialty Polymers, and Inks (CASPI); Fibers; Performance Chemicals and Intermediates (PCI); and Specialty Plastics. The CASPI segment manufactures resins, specialty polymers, and solvents that are used in the production of paints and coatings, inks, adhesives, and other formulated products. The Fibers segment offers Estron acetate tow and Estrobond triacetin plasticizers used in cigarette filters; Estron natural and Chromspun solution-dyed acetate yarns for use in apparel, home furnishings, and industrial fabrics; and cellulose acetate flake and acetyl raw materials for acetate fiber producers. The PCI segment offers intermediates; performance chemicals; and complex organic molecules, such as plasticizers, diketene derivatives, specialty ketones, and specialty anhydrides for medical, pharmaceutical, fiber, and food and beverage ingredients. The Specialty Plastics segment primarily offers engineering and specialty polymers, specialty film and sheet products, and packaging film and fiber products.
Before discussing potential trading opportunities, please take a look at the 1-year chart of EMN (Eastman Chemical Company) below with my added notations:
As you can see from the chart above, EMN has a very important price level at $50 (red). Not only was that $50 level a support back in March and February, but it was also resistance in May and June. Now that the stock has broken back above that level, $50 is acting as support again. The $55 resistance (navy) would be the next key level if the stock were to move higher.
The Tale of the Tape: EMN has key levels at $50 and $55. A long trade on a pullback to $50, or on a break above $55, with a stop placed under the level of entry would be advisable. However, if the stock were to break below that $50 level, a short trade could be made.
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