Forum Energy Technologies, Inc. designs, manufactures, and distributes products to the oil and natural gas industry in the United States and internationally. The company operates in two segments, Drilling & Subsea, and Production & Infrastructure. The Drilling & Subsea segment designs and manufactures products, and provides related services to the subsea construction, drilling, well construction, completion, and intervention markets. The Production & Infrastructure segment designs and manufactures products, and provides related equipment and services to the well stimulation, production, and infrastructure markets.
Take a look at the 1-year chart of Forum (NYSE: FET) below with my added notations:
After FET’s 6-month decline, the stock began a rally. During the most recent 4-month stretch the stock has had a tendency of creating support and resistance levels at the increments of $2 (blue). For example, the most recent level of resistance was at $20, and that level was also a brief support once the stock broke above it. Next, $18 has popped up as both support and resistance as well. Lastly, both $16 and $22 have also been key to the stock.
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The Tale of the Tape: FET just broke back above $22. A long trade could be made at that level with a stop placed under it. A short trade could be made on a break below $22 with the expectation of a fall down to the next $2 level at $20.
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