USG Corporation (NYSE: USG)

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USG Corporation, through its subsidiaries, engages in the manufacture and distribution of building materials worldwide. The company offers gypsum and related products, including gypsum wallboards, joint compounds used for finishing wallboard joints, cement boards and accessories, glass mat sheathing, gypsum fiber panels, glass mat panels, poured gypsum underlayments, ultra light panels, and various construction plaster products. Its gypsum products are used in various building applications to finish the interior walls, ceilings, and floors in residential, commercial, and institutional constructions, and repair and remodel constructions. The company also produces gypsum-based products for agricultural and industrial customers to use in various applications, including soil conditioning, road repair, fireproofing, and ceramics. In addition, it manufactures ceiling grid and acoustical ceiling tile for electrical and mechanical systems, and air distribution and maintenance applications. The company distributes its gypsum products through building materials dealers, home improvement centers and other retailers, specialty wallboard distributors, contractors, and a network of distributors. Further, it distributes other manufacturers’ gypsum wallboards, ceilings products, joint compound and other gypsum products, as well as drywall metal, insulation, roofing, fasteners, and exterior insulation finishing systems.

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

1-year chart of USG (USG Corporation)

USG has been in a steady trend higher since June. Along the way, USG has formed a nice trendline of support (blue). Always remember that any (2) points can start a trendline, but it’s the 3rd test and beyond that confirm its importance. Obviously USG’s trendline is very important to the stock since it has been tested on multiple occasions.

The Tale of the Tape: USG has created a nice trendline of support over the last (6) months. A long position could be entered on a pullback to that trendline, which is approaching $28, and a short position could be entered if USG were to break the trend line 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