Gentex Corporation is engaged in designing, developing, manufacturing, and marketing automatic-dimming rearview mirrors and electronics for the automotive industry; variable dimmable aircraft windows for the aviation industry; and commercial smoke alarms and signaling devices for the fire protection industry worldwide. The company offers automotive products, including interior and exterior electrochromic automatic-dimming rearview mirrors; automotive electronics; and interior and exterior non-automatic-dimming rearview mirrors with electronic features for automotive passenger cars, light trucks, pick-up trucks, sport utility vehicles, and vans for original equipment manufacturers, tier one automotive mirror manufacturers, and various aftermarket and accessory customers.
Take a look at the 1-year chart of Gentex (NASDAQ: GNTX) with my added notations:
GNTX has been trading in a relatively tight range for the last 5 months. During that period of time the stock has formed a general resistance “zone” around $30 (red). In addition, the stock has also created a relatively clear level of support near $28 (blue). At some point the stock will have to break one of the two levels created by GNTX’s trading range.
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The Tale of the Tape: GNTX has a clear level of support at $28 and a resistance zone near $30. The possible long positions on the stock would be either on a pullback to $28, or on a breakout above $30. The ideal short opportunities would be on a break below $28, or on a rally back up near $30.
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