Armstrong World Industries, Inc. (NYSE: AWI)

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Armstrong World Industries, Inc. engages in the design, manufacture, and sale of flooring products and ceiling systems in the Americas, Europe, and the Pacific Rim. The company’s Building Products segment produces suspended mineral fibers, soft fibers, and metal ceiling systems for use in commercial, institutional, and residential settings. This segment sells its commercial ceiling materials and accessories to ceiling system contractors and resale distributors. Armstrong World Industries’ Resilient Flooring segment produces vinyl sheets, vinyl tiles, and linoleum flooring, as well as sources and sells laminate flooring products, adhesives, installation and maintenance materials, and accessories for homes, and commercial and institutional buildings. The company’s Wood Flooring segment offers pre-finished solid and engineered wood floors, and related accessories for use in new residential construction and renovation with various commercial applications in stores, restaurants, and offices. This segment sells its products to independent wholesale flooring distributors and large home centers. Armstrong World Industries’ Cabinets segment offers kitchen and bathroom cabinetry, and related products used in the residential new construction and renovation markets. This segment also provides design, fabrication, and installation services to single and multi-family homebuilders, remodelers, and consumers.

To analyze Armstrong’s stock for potential trading opportunities, please take a look at the 1-year chart of AWI (Armstrong World Industries, Inc.) below with my added notations:

1-year chart of AWI (Armstrong World Industries, Inc.)

If you look at AWI you will see that the $50 level (navy) was a major resistance from March up until just last month. After moving sideways during most of that time, the stock finally broke through that $50 resistance at the end of October. Last week AWI stalled at $55 and has now pulled back down to the $50 level.

The Tale of the Tape: AWI is back above the $50 level. You could buy AWI if it comes back down to the $50 level, with a stop placed below $50, or short the stock if it breaks the expected $50 support.

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