Cosan Limited (NYSE: CZZ)

Cosan Limited, engages in sugar and ethanol, fuel, logistics services, lubricants, and piped natural gas businesses primarily in Brazil, rest of South America, Europe, the Middle East, Asia, and North America. The company’s Raízen Energia segment produces and markets various products derived from sugar cane, including raw sugar, and anhydrous and hydrated ethanol. Its Raízen Combustíveis segment distributes and markets fuels, primarily through a franchised network of service stations under the Shell and Esso brands in Brazil. The company’s COMGÁS segment distributes piped natural gas to customers in the industrial, residential, commercial, automotive, thermogeneration, and cogeneration sectors in part of the State of Sao Paulo. Its Cosan Log segment provides logistics services for transport, storage, and port loading of commodities, primarily for sugar products. The company’s Radar segment is involved in buying, managing, selling, and leasing agricultural land. Its Lubricants segment produces and distributes lubricants under the Mobil and Comma brands.

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

1-year chart of Cosan (NYSE: CZZ)

APA took a steep drop back in the fall of last year. When the stock finally bottomed in December, CZZ ended up finding support at $6.00 (green) over the next 6 months. Now that the stock appears to be falling back down to that support level again, traders should be able to expect some sort of bounce. However, if the $6.00 support were to break, lower prices should follow.

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The Tale of the Tape: CZZ has an important level of support at $6.00. A trader could enter a long position at $6.00 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