Textron Inc. operates in the aircraft, defense, industrial, and finance businesses worldwide. It operates through five segments: Cessna, Bell, Textron Systems, Industrial, and Finance. The Cessna segment manufactures business jets, single-engine utility turboprops, and single-engine piston aircraft, as well as parts, maintenance, inspection, and repair services. The Bell segment manufactures and supplies military and commercial helicopters, tiltrotor aircraft, and related spare parts and services. The Textron Systems segment produces unmanned aircraft systems; armored vehicles, turrets and related subsystems, and marine craft and smart weapons. The Industrial segment offers blow-molded plastic fuel systems, windshield and headlamp washer systems, engine camshafts, catalytic reduction systems, and other parts. The Finance segment provides commercial loans and leases for aircraft and helicopters.
Take a look at the 1-year chart of Textron (NYSE: TXT) with my added notations:
Like yesterday’s LINTA, TXT has also been trading mostly sideways for the last 5 months. Over that period of time TXT has formed a resistance level at $41 (red). In addition, the stock has also created a level of support at $37 (blue). At some point the stock will have to break one of the two levels that the sideways consolidation has created.
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The Tale of the Tape: TXT has clear levels of support ($37) and resistance ($41). The possible long positions on the stock would be either on a pullback to $37, or on a breakout above $41. The ideal short opportunity would be on a break below $37.
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