Johnson Controls Inc (NYSE: JCI)

Johnson Controls, Inc. engages in building efficiency, automotive experience, and power solutions businesses worldwide. Its Building Efficiency segment designs, produces, markets, and installs integrated heating, ventilating, and air conditioning systems, as well as building management systems, controls, and security and mechanical equipment. This segment also provides technical services, energy management consulting, and operations of real estate portfolios for the non-residential buildings market. The company’s Automotive Experience segment designs and manufactures interior products and systems for passenger cars and light trucks, including vans, pick-up trucks, and sport/crossover utility vehicles serving original equipment manufacturers. The Power Solutions segment produces lead-acid automotive batteries, as well as offers absorbent glass mat and lithium-ion battery technologies for hybrid and electric vehicles.

To review Johnson’s stock, please take a look at the 8-month chart of JCI (Johnson Controls, Inc.) below with my added notations:

8-month chart of JCI (Johnson Controls, Inc.)

After breaking through the $38 resistance (blue) in July, JCI has hit a recent high of $42. During the last two months the stock has been stuck within a common pattern known as a rectangle. Rectangle patterns form when a stock bounces between a horizontal support and resistance. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. JCI’s rectangle pattern has formed a $42 resistance (red) and a $40 support (green). A break above $42 would also be a new 52-week high, while a break below $40 should mean a minimum fall to $38.

The Tale of the Tape: JCI has formed a rectangle pattern. The possible long positions on the stock would be either on a pullback to $40, or on a breakout above $42. The ideal short opportunity would be on a break below $40.

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!

Good luck!

Christian Tharp, CMT