Genuine Parts Company distributes automotive replacement parts, industrial replacement parts, office products, and electrical/electronic materials in the United States, Puerto Rico, the Dominican Republic, Mexico, and Canada. It distributes automotive replacement parts for imported vehicles, trucks, SUVs, buses, motorcycles, recreational vehicles, farm vehicles, small engines, farm equipment, and heavy duty equipment; and accessory items used in the automotive aftermarket, including repair shops, service stations, fleet operators, automobile and truck dealers, leasing companies, bus and truck lines, mass merchandisers, farms, industrial concerns, and individuals through 62 NAPA automotive parts distribution centers and 1,100 NAPA AUTO PARTS stores.
To review Genuine’s stock, please take a look at the 1-year chart of GPC (Genuine Parts Company) below with my added notations:
GPC has been trading sideways for the last 3 months. Over that period of time the stock has formed a clear resistance level at $88 (red). In addition, GPC had also created a strong level of support at $84 (green), which was also a prior level of resistance for the stock. At some point the stock had to break one of those two levels created by the rectangle pattern, and yesterday the stock broke support.
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The Tale of the Tape: GPC had a clear level of support at $84 and yesterday the stock broke that support. The ideal short opportunity would be on a rally back up to or near that previous $84 level. On the other hand, one would want to enter a long position on a break back above the $84 level.
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
Follow me on Twitter: @cmtstockcoach