Atwood Oceanics, Inc., an offshore drilling contractor, engages in the drilling and completion of exploratory and developmental oil and gas wells worldwide. As of November 10, 2014, it owned a fleet of 13 mobile offshore drilling units, as well as 3 ultra-deepwater drillships under construction. The company was founded in 1968 and is headquartered in Houston, Texas.
Take a look at the 1-year chart of Atwood (NYSE: ATW) below with the added notations:
ATW lost almost half of its value after breaking its $45 support (green) in September. However, since bottoming near $26 the stock has rallied back a bit. The $30 level (blue) had been resistance, but once ATW broke through it the stock pushed back up to the $35 level (red). That resistance has now sent the stock back down to the old $30 breakout point.
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The Tale of the Tape: ATW has important levels to watch at $30 and $35. A trader could enter a long position on a pullback down to $30, or on a break above $35, with a stop placed under the level. However, a short trade could be made instead if the stock fails to hold $30.
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