NOW Inc (NYSE: DNOW)

NOW Inc. distributes energy and industrial products to upstream, midstream, downstream, and industrial markets in the United States, Canada, and internationally. The company’s products include pipes, valves and valve automations, fittings, mill and industrial supplies, tools, safety products, and artificial lift systems. It also provides supply chain management, project management, and e-commerce solutions. The company offers its products under the DistributionNOW and Wilson Export brand names. It serves oil and gas operators and drilling contractors, refineries, chemical companies, utilities, manufacturers, and engineering and construction companies.

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

1-year chart of NOW (NYSE: DNOW)

DNOW has been trending lower pretty much since the stock IPO’d last year. Over the last month or so, however, DNOW has been finding support at $22 (purple) whenever that price has been approached. Now that the stock is there again, traders should be able to expect some sort of bounce. However, if the $22 support were to break, much lower prices should follow.

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The Tale of the Tape: DNOW has a key level of support at $22. A trader could enter a long position at $22 with a stop placed under the level. If the stock were to break below the support a short position could be entered instead.

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