Cytec Industries Inc., a specialty chemicals and materials company, focuses on developing, manufacturing, and selling value-added products for aerospace and industrial materials, mining, and plastic industries worldwide. It operates in four segments: The Engineered Materials segment offers aerospace-qualified prepregs, resin infusion systems, structural/surfacing adhesives, and ablatives, as well as industrial-grade prepregs and structural/surfacing adhesives high performance carbon fibers. The Umeco segment offers high performance composites structural materials/solutions; and process materials/solutions, such as vacuum bagging, release films, and sealant tapes. The In Process Separation segment provides mining chemicals, including flotation promoters, collectors, frothers, dispersants and depressants, solvent extractants, flocculants, filter and dewatering aids, antiscalants, and defoamers. The Additive Technologies segment offers polymer additives, such as ultraviolet light stabilizers and absorbers, and high performance antioxidants and antistatic agents; specialty additives consisting of surfactants, specialty monomers, resin amines, and PTZ phenothiazine; and formulated resins.
To analyze the company’s stock for potential trading opportunities, please take a look at the 1-year chart of CYT (Cytec Industries, Inc.) below with my added notations:
CYT has had a nice run since it’s June low of $55. In August the stock broke above the $65 resistance that had been stalling the stock and then created a $70 resistance (blue) from there. After breaking above that resistance in January, the $70 level became support as expected and $75 became the new level of resistance (red). Now that CYT has taken another step higher by breaking above $75, one might expect that level to now become support just as the previous level of $70 did.
The Tale of the Tape: CYT has broken above $75. A long position could be entered at the $75 support with a stop placed below the level of entry. A short play could be made on a break below $75 with an expectation of a fall back down to $70.
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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!
Christian Tharp, CMT