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. In addition, it provides natural gas compression services for customer specific systems; and treating services, such as carbon dioxide and hydrogen sulfide removal, natural gas cooling, and dehydration.
Take a look at the 1-year chart of Energy Transfer (NYSE: ETE) below with added notations:
ETE was on a nice uptrend until October caused the stock to tank. However, just as quickly as the stock fell it rallied right back up again. During the last 3 months the stock had also created a clear level of resistance at $62.50 (green). That resistance level was also a 52-week high resistance. Earlier this week, ETE broke to a new high, and the $62.50 level should now provide support on any pullbacks. A break below $62.50 could signal a false breakout.
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The Tale of the Tape: ETE broke out to a new 52-week high. A long trade could be made near $62.50 with a stop placed below that level. A break back below $62.50 would negate the forecast for a continued move higher.
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