Sally Beauty Holdings, Inc. (NYSE: SBH)

Sally Beauty Holdings, Inc., through its subsidiaries, engages in the distribution and retail of professional beauty supplies primarily in North America, South America, and Europe. The company operates in two segments, Sally Beauty Supply and Beauty Systems Group. The Sally Beauty Supply segment operates a chain of cash and carry retail stores that provide various professional beauty supplies, including hair color products, hair care products, hair dryers and hair styling appliances, skin and nail care products, and other beauty items to salon professionals and retail customers. This segment sells various third-party brands, such as Clairol, Revlon, and Conair, as well as a selection of exclusive-label merchandise. The Beauty Systems Group segment distributes professional brands of beauty products directly to salons and salon professionals through its sales force, as well as through company-operated and franchised stores. This segment operates stores under the CosmoProf service mark. It sells a range of third-party brands, such as Paul Mitchell, Wella, Sebastian, Goldwell, Joico, and Aquage.

To review Tyson’s stock, please take a look at the 1-year chart of SBH (Sally Beauty Holdings, Inc.) below with my added notations:

1-year chart of SBH (Sally Beauty Holdings, Inc.)

SBH has formed a key level of support around 25.50 (blue) over the last (3) months. In addition, the stock has created a down trending resistance starting from the middle of August (red). These two occurrences combined have SBH stuck trading within a common chart pattern known as a descending triangle. At some point, the stock has to break support or break its string of lower highs.

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The Tale of the Tape: SBH has formed a descending triangle pattern. A short trade could be made on a break of the 25.25-50 support area. A breakthrough 26.50 would break the down trending resistance and would set up a potential long trade.

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