Emerson Electric Co. (NYSE: EMR)

Emerson Electric Co., a diversified technology company, designs and supplies products and technology, and delivers engineering services and solutions to the industrial, commercial, and consumer markets worldwide. The company was formerly known as The Emerson Electric Manufacturing Company and changed its name to Emerson Electric Co. in 2000. Emerson Electric Co. was founded in 1890 and is headquartered in St. Louis, Missouri.

Please take a look at the 1 yr. chart of EMR (Emerson Electric, Co.) that I have shown below with my added notations:

1 yr. chart of EMR (Emerson Electric, Co.)

EMR had formed a nicely defined up-channel over the last 3 months. A channel is formed through the combination of a trend line support that runs parallel to a trend line resistance. When it comes to a channel any (3) points can start the channel, but it’s the 4th test and beyond that confirm it. You can see that EMR has multiple test points between the channel resistance (red) and the channel support (blue). Yesterday EMR broke the channel support and should be moving lower from here.

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The Tale of the Tape: EMR broke out of the bottom up its up-channel. A short trade could be entered on any rallies up to the previous channel support. That line currently sits just above $67.

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