Acadia Healthcare Company Inc (NASDAQ: ACHC)

Acadia Healthcare Company, Inc. develops and operates inpatient psychiatric facilities, residential treatment centers, group homes, and substance abuse facilities providing outpatient behavioral healthcare services to serve the behavioral health and recovery needs of communities in the United States, the United Kingdom, and Puerto Rico. Its acute inpatient psychiatric facilities offer evaluation and crisis stabilization of patients with severe psychiatric diagnoses; specialty treatment facilities include residential recovery facilities, eating disorder facilities, and comprehensive treatment centers providing a comprehensive continuum of care for adults with addictive disorders and co-occurring mental disorders; and residential treatment centers treat patients with behavioral disorders in a non-hospital setting, including outdoor programs.

Take a look at the 1-year chart of Acadia (NASDAQ: ACHC) below with the added notations:

1-year chart of Acadia (NASDAQ: ACHC)

ACHC has been on a nice, consistent rally over the course of the past year. In addition, the $75 price level (blue) has become very important to the stock over the past 3 months. Not only was $75 a key resistance back in May and June, that level was also support once ACHC got above it. Earlier this week the $75 level was hit as resistance again.

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The Tale of the Tape: ACHC has a key level at $75. A trader could enter a long position on a break above $75 with a stop placed under the level. However, if traders are bearish on the stock, a short trade could be made instead at the $75 resistance.

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