Tempur Sealy International, Inc. develops, manufactures, markets, and distributes bedding products in North America and internationally. The company provides mattresses, foundations, adjustable bases, and other products, including pillows and other accessories. It offers its products under the TEMPUR, Tempur-Pedic, Sealy, Sealy Posturepedic, Optimum, and Stearns & Foster brand names. The company sells its products through furniture and bedding retailers, department stores, specialty retailers, and warehouse clubs; e-commerce platforms, company-owned stores, and call centers; and other third party distributors, and hospitality and healthcare customers.
Take a look at the 1-year chart of Tempur (NYSE: TPX) below with my added notations:
TPX has been slowly trending lower since July. During the most recent 4 months the stock has formed an important trend line of resistance (blue). Always remember, any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its importance. TPX obviously has an important trendline of resistance, which currently sits just above $55.
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The Tale of the Tape: TPX is currently stuck under a down trending resistance. A break above that resistance should mean higher prices, thus a long trade could be made. Short traders might look to enter a trade at the resistance.
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