Chicago Bridge & Iron Company N.V. (NYSE: CBI)

Chicago Bridge & Iron Company N.V. provides conceptual design, technology, engineering, procurement, fabrication, construction, and commissioning services to customers in the energy, petrochemical, and natural resource industries worldwide. The Steel Plate Structures segment offers engineering, procurement, fabrication, and construction services, including mechanical erection services for the hydrocarbon, water, and nuclear industries. The Project Engineering and Construction segment provides engineering, procurement, fabrication, and construction services for upstream and downstream energy infrastructure facilities. The Lummus Technology segment offers licenses, services, catalysts, and proprietary equipment for the hydrocarbon refining, petrochemical, and gas processing industries.

To review Chicago’s stock, please take a look at the 9-month chart of CBI (Chicago Bridge & Iron Company N.V.) below with my added notations:

9-month chart of CBI (Chicago Bridge & Iron Company N.V.)

CBI has been trading sideways for the last month or so. Over that period of time, the stock has formed a clear resistance level at $80 (blue). In addition, the stock has also created a strong level of support at $75 (green) that has held since the 2nd week of November. At some point the stock will have to break one of those two levels.

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The Tale of the Tape: CBI has clear levels of support ($75) and resistance ($80). The possible long positions on the stock would be either on a pullback to $75, or on a breakout above $80. The ideal short opportunity would be on a break below $75.

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

Follow me on Twitter: @cmtstockcoach