Energy Transfer Equity LP (NYSE: ETE)

Energy Transfer Equity, L.P., through its subsidiaries, provides diversified energy-related services in the Unites States. The company sells natural gas to electric utilities, independent power plants, local distribution companies, industrial end-users, and other marketing companies. It owns and operates approximately 7,800 miles of natural gas transportation pipelines and 3 natural gas storage facilities located in the state of Texas; and approximately 12,800 miles of interstate natural gas pipeline.

Take a look at the 1-year chart of Energy Transfer (NYSE: ETE) below with my added notations:

1-year chart of Energy Transfer (NYSE: ETE)

ETE has been trending higher for the last 12 months, and since the beginning of 2014 the stock has formed a clear trendline of support (green). However, over the last 2 months the stock had formed at 52-week high resistance at $60 (blue). At some point ETE was going to have to break one of those two levels, and yesterday the stock broke to a new high.

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The Tale of the Tape: ETE broke though its $60 resistance, which was also a new 52-week high. A long trade could be made on a pullback down to the $60 level with a stop placed below that level. A break back below the $60 level should lead to a fall down to the trendline support.

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