Constant Contact, Inc. provides online marketing tools that are designed for small businesses, associations, and non-profits primarily in the United States. The company offers email marketing products that allow customers to create, send, and track professional-looking email campaigns; event marketing products, which allow customers to promote and manage events, communicate with invitees and registrants, capture and track registrations, and collect online payments; and social media products, including Social Campaigns, which enable customers to reach and engage users on Facebook to grow their fans and create social word-of-mouth through easy-to-create offers and promotions.
Please take a look at the 1-year chart of CTCT (Constant Contact, Inc.) below with my added notations:
After declining from January until the beginning of April, CTCT slowly worked its way higher. During the last 3 months the stock created at clear resistance level at $30, while also forming an up-trending level of support as well. At some point the stock had to break one of those levels, and yesterday the stock broke support.
CTCT broke its up-trending support level. A short trade could be made on a rally up to that level with a stop placed above the entry. However, if the stock were to break above the $30 resistance traders might want to look to get long on the stock instead.
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The Tale of the Tape: VIPS had a level of resistance at $160 and the stock broke that resistance. The ideal long opportunity would be on a pullback down to or near that previous $160 level. On the other hand, one would want to enter a short position on a break back below that 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