Sometimes trading in the stock market can be complicated, and at times, confusing. However, there are some trading opportunities that are clear and somewhat obvious. One potentially simple trading opportunity would be for the stock of CNH Global NV.

CNH Global N.V. manufactures, markets, and distributes a line of agricultural and construction equipment and parts worldwide. It operates in three segments: Agricultural Equipment, Construction Equipment, and Financial Services. The Agricultural Equipment segment provides tractors, combine harvesters, hay and forage equipment, seeding and planting equipment, tillage equipment, and sprayers, as well as cotton picker packagers, and sugar cane and grape harvesters primarily under the Case IH and New Holland brands. The Construction Equipment segment offers heavy construction equipment, such as crawler and wheeled excavators, wheel loaders, graders, dozers, and articulated haul trucks. The Financial Services segment provides financial products and services, including retail financing for the purchase or lease of the company’s and other manufacturer’s new and used products. CNH Global N.V. sells and distributes its products through dealers and distributors in approximately 170 countries.

Please take a look at the 1-year chart of CNH (CNH Global N.V.) below with my added notations:

It’s relatively straightforward. CNH has been holding a very important level of support at $35 (navy) for the last (9) months. No matter what the market has or has not done over that period of time, CNH has not broken below that area of support.  If the market should move lower, CNH would most likely move closer to that $35 support area for a potential trade.

The Tale of the Tape: CNH has held a strong level of support at $35. If the stock were to approach that level again, a trader could enter a long position with a stop placed under the level. If CNH were to break below the support, a short position would be recommended instead.

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