SodaStream International Ltd. develops, manufactures, and markets beverage carbonation systems and related products. The company operates in four segments: The Americas; Western Europe; Asia-Pacific; and Central and Eastern Europe, Middle East, and Africa. It offers soda makers, exchangeable carbon-dioxide cylinders, which enable consumers to easily transform ordinary tap water instantly into carbonated soft drinks and sparkling water; and consumables, such as carbon-dioxide refills, reusable carbonation bottles, and flavors to add to the carbonated water. The company also sells accessories, including bottle cleaning materials and ice cube trays. In addition, it distributes Brita water filtration systems in Israel. The company markets its products under the SodaStream and Soda-Club brand names. It sells its products through individual retail stores and local distributors, as well as directly to customers.
To review Soda’s stock, please take a look at the 1-year chart of SODA (Sodastream International, Ltd.) below with my added notations:
SODA has been trending mostly lower for most of the entire year. During the last 5 months though, the stock had held a clear level of support at $35 (blue). Even though the market has caused most stocks to move higher over the last year, SODA had not been able to follow along and has recently broken below $35. This breakdown is not only a new 52-week low, but its also a break of a clearly defined support level.
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The Tale of the Tape: SODA has broken a key support level of $35, which was a 52-week low breakdown. This should signal lower prices ahead for the stock. A short trade could be entered on SODA on a rally up to $35, with a stop set above that level. A break back above $35 would negate the forecast for a move lower and a long position could be considered instead.
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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