Rite Aid Corporation (NYSE: RAD)

Rite Aid Corporation, through its subsidiaries, operates a chain of retail drugstores in the United States. The company sells prescription drugs and a range of other merchandise, including over-the-counter medications, health and beauty aids, personal care items, cosmetics, household items, food and beverages, greeting cards, seasonal merchandise, and other every day and convenience products. It also offers health coaching, shared decision making tools, and health care analytics, including health coaching for medical decisions, chronic conditions, and wellness; population analytic solutions; and consulting services.

Take a look at the 1-year chart of Rite Aid (NYSE: RAD) below with my added notations:

RAD

RAD has been winding its way higher since its October bottom and along the way it has created a couple of levels to watch. First, the stock has formed a relatively clear resistance at $9 (red), which would also be a 52-week high breakout if RAD could manage to move above it. In addition, the stock is climbing a short term, up-trending support level (green) over the last 5 months. These two levels combined have RAD stuck within a common chart pattern known as an ascending triangle. Eventually, RAD will have to break one of those (2) levels.

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The Tale of the Tape: RAD has an up trending support and a 52-week resistance level to watch. A long trade could be made on a pullback to the support, or on a break above $9. A break below the up trending support could be an opportunity to enter a short trade.

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