Tenet Healthcare Corp (NYSE: THC)

Tenet Healthcare Corporation, an investor-owned health care services company, primarily operates acute care hospitals and related health care facilities in the United States. Its general hospitals offer acute care services, operating and recovery rooms, radiology services, respiratory therapy services, clinical laboratories, and pharmacies. As of December 31, 2013, it operated 77 hospitals with 20,293 beds; 183 outpatient centers; 6 health plans; 6 accountable care networks; and Conifer Health Solutions, LLC, which provides business process solutions to approximately 700 hospital and other clients. Tenet Healthcare Corporation was founded in 1967 and is headquartered in Dallas, Texas.

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

1-year chart of Tenet (NYSE: THC)

THC had a great summer, but declined from there just as badly as it had rallied. Over the last year, the stock has created a key price level at $44 (blue), which has been support the last 3 times that level has been tested. Now that the stock appears to be have broken that support, lower prices should follow.

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The Tale of the Tape: THC broke a key level of support at $44. A trader could enter a short position on any rallies up to or near $44 with a stop placed above the level. If the stock were to break back above the $44 level, a long 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