Cameron International Corporation provides flow equipment products, systems, and services worldwide. The company’s Subsea segment offers integrated solutions, products, systems, and services to the subsea oil and gas market, including integrated subsea production systems involving wellheads, subsea trees, manifolds and flowline connectors, and subsea processing systems. Its Surface segment provides onshore and offshore platform wellhead systems and processing solutions, including valves, chokes, actuators, Christmas trees, and aftermarket services to oil and gas operators. The company’s Drilling segment provides drilling equipment and aftermarket services. Its Valves & Measurement segment provides valves and measurement systems to control, direct, and measure the flow of oil and gas.
Take a look at the 1-year chart of Cameron (NYSE: CAM) below with the added notations:
CAM was moving along just fine up until the end of August, and from there the stock embarked on a 5-month decline that may, or may not, be over. During the sideways price action of the last 3 months, the stock has shown a tendency to find support and resistance at the $45 level (green). In addition, CAM appears to have a lower level of support at $42 (blue). CAM is currently sitting just under $45.
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The Tale of the Tape: CAM has key levels at $42 and $45. A trader could enter a long position at $42 with a stop placed under the level. However, a short trade could be made instead at $45, or if the stock were to break below $42. Another long trade could be considered on a break above $45.
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
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