Restoration Hardware Holdings, Inc., together with its subsidiaries, engages in the retail of home furnishings. Its product categories include furniture, lighting, textiles, bathware, décor, outdoor and garden, tableware, and children’s furnishings. The company sells its products through its stores and catalogs, as well as through its Websites, such as restorationhardware.com, rh.com, and rhbabyandchild.com. As of January 31, 2015, the company operated 67 retail stores consisting of 57 Legacy Galleries, 7 larger format Galleries, and 3 Baby & Child Galleries, as well as 17 outlet stores in the United States and Canada. The company was founded in 1979 and is headquartered in Corte Madera, California.
Take a look at the 1-year chart of Restoration (NYSE: RH) below with added notations:
Overall, RH has traded sideways since its December peak, while also taking two large dips. Several times over that period of time the stock has hit the same resistance at $100 (red). Yesterday the stock tried yet again to break out, but failed once more. A close above the $100 should lead to a significant leg higher for RH.
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The Tale of the Tape: RH has a 52-week resistance at $100. The possible long position on the stock would be on a breakout above that level with a stop placed under it.
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