The GEO Group Inc (NYSE: GEO)

The GEO Group, Inc. provides government-outsourced services specializing in the management of correctional, detention, and re-entry facilities, and the provision of community based services and youth services in the United States, Australia, South Africa, the United Kingdom, and Canada. It operates through four segments: U.S. Corrections & Detention, GEO Community Services, International Services, and Facility Construction & Design. The company owns, leases, and operates a range of correctional and detention facilities, including maximum, medium, and minimum security prisons; immigration detention centers; minimum security detention centers; and community based re-entry facilities.

Take a look at the 1-year chart of GEO (NYSE: GEO) below with added notations:

1-year chart of GEO (NYSE: GEO)

GEO has been trading sideways for the last 3 months, while forming a common pattern known as a rectangle. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. GEO’s rectangle pattern has formed a $38.50 resistance (red) and a $36 support (blue). At some point the stock will have to break one of the two levels created by the rectangle pattern.

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The Tale of the Tape: GEO is trading within a rectangle pattern. The possible long positions on the stock would be either on a pullback to $36, or on a breakout above $38.50. The ideal short opportunity would be on a break below $36.

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