Axiall Corporation operates as an integrated chemicals and building products company in North America and Asia. The company manufactures chlor-alkali and derivatives, chlorovinyls, and aromatics products, including chlorine, caustic soda, ethylene dichloride, vinyl chloride monomer, polyvinyl chloride, vinyl resins, vinyl compounds, compound additives and plasticizers, chlorinated solvents, calcium hypochlorite, muriatic acid, phosgene derivatives, acetone, cumene, phenol, and alpha-methylstyrene. These products are used in various applications, including plastics, pulp and paper production, packaging, chemical intermediates, pharmaceuticals, medical and agricultural applications and paints, acrylics, and varnishes. It also produces vinyl-based building and home improvement products, such as window and door profiles, siding products, pipe and pipe fittings, moldings, and trim and decking products, which are marketed under the Royal Building Products, Celect, Zuri, Korflo, Overture, S4S, and Exterior Portfolio brand names for the electrical, municipal, irrigation, plumbing, and residential and industrial applications.
To review a current H&S pattern, please take a look at the 1-year chart of AXLL (Axiall Corporation) below with my added notations:
AXLL had been on a 10-month rally since its bottom in June. Over the last (4) months the stock has created a very important level at $51 (navy), which was also the “neckline” support for the H&S pattern. Above the neckline you will notice the H&S pattern itself (blue). Confirmation of the H&S occurred when AXLL broke its $51 “neckline” support. So, the stock should be moving lower overall from here.
Keep in mind that simple is usually better. Had I never pointed out this H&S pattern, one would still think this stock is moving lower simply if it broke below the $51 support level. In short, whether you noticed the pattern or not, the trade would still be the same: On the break below the key $51 level.
The Tale of the Tape: After embarking on a nice uptrend, AXLL confirmed a head & shoulders pattern. A short trade could be placed now, or could be entered on any rallies up to or near the $51 area.
Would you like assistance in making your TBS trades? If so, email me at Christian@yolopub.com and let’s talk about working together one on one!
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