Sodastream International Ltd (NASDAQ: SODA)

SodaStream International Ltd. engages in the development, manufacture, and sale of home beverage carbonation systems that enable consumers to transform ordinary tap water instantly into carbonated soft drinks and sparkling water. The company operates through four segments: the Americas; Western Europe; the Asia-Pacific; and Central and Eastern Europe, the Middle East, and Africa. It offers a range of soda makers; exchangeable food-grade carbon-dioxide (CO2) cylinders and refills; reusable carbonation bottles; and various flavors to add to the carbonated water, as well as sells additional accessories, such as bottle cleaning materials and ice cube trays. The company sells its products through approximately 60,000 retail stores in 45 countries. In addition, it distributes Brita water filtration systems in Israel.

To review Soda’s stock, please take a look at the 1-year chart of SODA (SodaStream International, Ltd.) below with my added notations:

1-year chart of SODA (SodaStream International, Ltd.)

SODA has been trading sideways for the last 2 months. Over that period of time the stock had formed a clear resistance level at $45 (blue). In addition, the stock had also created a strong level of support at $37.50 (green). At some point the stock would’ve had to break one of the two levels the rectangle pattern had created, and yesterday the stock broke through the $45.

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The Tale of the Tape: Yesterday SODA broke through resistance at $45. A possible long position could be made on a pullback to $45 with a stop placed below that level. A break back below $45 could negate the forecast for a higher move.

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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

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