Taubman Centers, Inc. (NYSE: TCO)

Today’s article focuses on another stock approaching a 52-week high. As a reminder, when it comes a stock hitting a 52-week high, I prefer to look for ones hitting a “new” high. In my view that would be a stock that hasn’t hit a new 52-week high in quite some time. In addition, and more importantly, I want the stock to have broken through a key area of resistance. This way I know that it wasn’t just any move higher, it was an important breakout.

Taubman Centers, Inc. operates as a real estate investment trust. The operating partnership is a subsidiary that engages in the ownership, management, leasing, acquisition, development, and expansion of regional retail shopping centers and interests therein. As of August 23, 2007, it owned and/or managed 23 urban and suburban shopping centers in 11 states the United States. These centers are located in metropolitan areas, including New York City, Los Angeles, San Francisco, Denver, Detroit, Phoenix, Miami, Dallas, Tampa, Orlando, and Washington, D.C. The operating partnership also owns certain regional retail shopping center development projects, as well as approximately 99% of The Taubman Company LLC, which manages the shopping centers and provides other services to the operating partnership and to the company. Taubman Centers qualifies as a REIT under the Internal Revenue Code. As a REIT, the company would not be subjected to federal income tax to the extent it distributes at least 90% of its taxable income to its shareholders.

To review Taubman’s stock, please take a look at the 1-year chart of TCO (Taubman Centers, Inc.) below with my added notations:

TCO has been trading sideways to higher from March until present while running into an $80 resistance (navy). The $80 resistance meets my definition of a clear resistance level that would signify an important 52-week high breakout if TCO could manage to break above it. IF that were to happen, the stock should probably be heading higher overall. You will also notice the lower levels of $75 (red) and $70 (blue) that could become significant if TCO pulls back instead.

The Tale of the Tape: TCO has formed a key resistance level at $80, which would be a 52-week high breakout if the stock can break above it. A long trade could be entered if TCO breaks above $80, or pulls back to $75, with a stop set below the level of entry.

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