Praxair, Inc. (NYSE: PX)

Praxair, Inc. engages in the production, distribution, and sale atmospheric and process gases, as well as surface coatings in North America, Europe, South America, and Asia. The company offers atmospheric gases, such as oxygen, nitrogen, argon, and rare gases; and process gases comprising carbon dioxide, helium, hydrogen, electronic gases, specialty gases, and acetylene. It also designs, engineers, and builds equipment that produces industrial gases; and manufactures precious metal and ceramic sputtering targets used primarily in the production of semiconductors. In addition, the company supplies surface coatings consisting of wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders to the aircraft, energy, printing, textile, plastics, primary metals, petrochemical, and other industries. Further, it provides electric arc, plasma, and oxygen fuel spray equipment, as well as arc and flame wire equipment used for the application of wear-resistant coatings; and distributes welding equipment purchased from independent manufacturers. The company sells its products primarily through independent distributors.

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

1-year chart of PX (Praxair, Inc.)

PX has been trading within a sideways Rectangle for the last (3) months. Rectangle patterns form when a stock gets stuck bouncing between a horizontal support and resistance. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. For PX, the Rectangle pattern has formed a $110 resistance (red), which was also a previous support, and a $103 support (blue).

The Tale of the Tape: PX has formed a very common chart pattern know as a Rectangle. The possible long positions on PX would be either on a pullback to $103, or on a break above $110. The short opportunities would be at either $110 or on a breakdown below $103.

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