CME Group Inc., through its subsidiaries, operates contract markets for the trading of futures and options on futures contracts worldwide. It offers a range of products for trading and/or clearing across various asset classes, based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, and metals. The products include exchange-traded; and privately negotiated futures and options contracts and swaps. The company executes trades through its electronic trading platforms, open outcry, and privately negotiated transactions, as well as provides hosting, connectivity, and customer support for electronic trading through its co-location services. It also offers clearing and settlement services for exchange-traded contracts, as well as for cleared swaps; and regulatory reporting solutions for market participants through global repository services in the United States, the United Kingdom, and Canada.
Take a look at the 1-year chart of CME (NASDAQ: CME) below with my added notations:
CME has been trending higher over the past year, and along the way it has created a couple of levels to watch. First, the stock has formed a clear resistance at $100 (red), which would also be a 52-week high breakout if CME could manage to move above it. In addition, the stock is climbing an up-trending support level (blue) since October. These two levels combined have CME stuck within a common chart pattern known as an ascending triangle. Eventually, the stock will have to break one of those (2) levels.
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The Tale of the Tape: CME 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 $100. 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!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach