Ferro Corporation, together with its subsidiaries, produces and sells specialty materials and chemicals in the United States and internationally. The company operates in five segments: Pigments, Powders, and Oxides; Performance Colors and Glass; Performance Coatings; Polymer Additives; and Specialty Plastics. It offers various performance materials, including frits, porcelain and other glass enamels, glazes, stains, decorating colors, pigments, inks, polishing materials, specialty dielectrics, electronic glasses, and other specialty coatings; and performance chemicals comprising polymer additives, engineered plastic compounds, and pigment dispersions. The company’s products are used in appliances, automobiles, building and renovation, electronics, household furnishings, packaging, and industrial products. It sells its products primarily to the manufacturers of ceramic tiles, appliances, construction materials, automobile parts, glass, bottles, and wall coverings directly, as well as through agents and distributors.
To review Ferro’s stock, please take a look at the 1-year chart of FOE (Ferro Corporation) below with my added notations:
Since November FOE had essentially been trading sideways while forming a common pattern known as a rectangle. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. FOE’s rectangle pattern had formed a $14 resistance (red) and a $12 support (green). The break above $14 was not only a break out of the pattern, but it was also a new 52-week high.
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The Tale of the Tape: FOE broke its rectangle pattern to a new high. The possible long position on the stock would be on a pullback to $14, while a break back below $14 could negate the expectation for higher prices.
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!
Christian Tharp, CMT
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