Computer Sciences Corporation (NYSE: CSC)

Computer Sciences Corporation provides information technology (IT) and professional services and solutions in North America, Europe, Asia, and Australia. The company’s Managed Services Sector segment offers IT outsourcing services that involve customer’s technology infrastructure, including systems analysis, applications development, network operations, end-user computing, and data center management. Its North American Public Sector segment provides systems integration and outsourcing, and complex project management and technical services, such as enterprise modernization, telecommunications and networking, managed services, base and range operations, and training and simulation services for government agencies, as well as the department of homeland security and NASA. The company’s Business Solutions and Services segment offers consulting and professional services that include advising clients on the strategic acquisition and utilization of IT and on business strategy, security, modeling, simulation, engineering, operations, change management, and business process reengineering; and systems integration services, which comprise designing, developing, implementing, and integrating information systems, as well as intellectual property-based software.

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

1-year chart of CSC (Computer Sciences Corporation)

CSC had worked its way higher from its $30 bottom in October up until its peak in March. Then, for about (5) months the stock had been stalling at a $50 resistance (navy), which was also a 52-week high resistance. Finally, in the beginning of August CSC broke through that $50 resistance. The stock has pulled back down to that $50 level, which should now act as support.

The Tale of the Tape: CSC broke out to a new 52-week high and now seems to be pulling back. A long trade could be made at $50 with a stop placed below that level. A break below $50 would negate the forecast for a continued move higher.

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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