Liquidity Services, Inc. (NASDAQ: LQDT)

Liquidity Services, Inc. operates various online auction marketplaces for surplus, salvage, and scrap assets in the United States. The company’s auction marketplaces include that enables corporations to sell surplus and salvage consumer goods and capital assets;, which enables selected federal government agencies to sell surplus and scrap assets; and that enables local and state government entities, including city, county, and state agencies, as well as school boards and public utilities to sell surplus and salvage assets. It also operates that enables corporations to sell idle, surplus, and scrap equipment in the oil and gas, petrochemical and power generation industries; for corporations located in the United States, Europe, and Asia to sell manufacturing surplus and salvage capital assets. The company’s marketplaces provide professional buyers access to supply of surplus and salvage assets presented with customer focused information, including digital images and other relevant product information along with services to complete the transaction; and enable corporate and government sellers to enhance their financial return on excess assets by providing liquid marketplaces and value-added services that integrate sales and marketing, logistics, and transaction settlement.

Please take a look at the 1-year chart of LQDT (Liquidity Services, Inc.) below with my added notations:

1-year chart of LQDT (Liquidity Services, Inc.)

After peaking at $57 in September, LQDT has gradually worked its way lower. From November until May the stock had shown a tendency to react to the level of $35 (red) and LQDT showed a sign of life when it broke back above $35 in mid-May. Unfortunately, the stock stalled again and broke back below that level in June. The stock is now approaching the 52-week low level of $30 (blue) that it has tested multiple times since the end of January.

The Tale of the Tape: LQDT is approaching its key level of $30. A trader could enter a long position at $30 with a stop placed under the level. If the stock were to break below that support a short position would be recommended instead.

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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!

Good luck!

Christian Tharp, CMT