SanDisk Corporation designs, develops, manufactures, and markets data storage solutions in the United States and internationally. The company offers removable cards, which are used in various applications and consumer devices, including digital cameras, camcorders, smartphones, tablets, and eReaders under the SanDisk Ultra, SanDisk Extreme, and SanDisk Extreme PRO brands; and embedded products that are used in mobile phones, tablets, notebooks, and other portable and wearable devices, as well as in automotive and connected home applications under the brand name iNAND. It also provides solid state drives (SSDs) for client computing applications, which include desktop computers, notebook computers, tablets, and other computing devices; and enterprise SSD solutions, as well as universal serial bus flash drives for use in the computing and consumer markets.
Take a look at the 1-year chart of SanDisk (NASDAQ: SNDK) below with my added notations:
SNDK has been trending lower for the past 9 months. Over that time, the stock has formed an important trend line of resistance (red). Any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its importance. SNDK obviously has an important trendline of resistance, which currently sits right around $55. A break above that line should mean higher prices, overall, for the stock.
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The Tale of the Tape: SNDK is currently stuck under a down trending resistance. A break above that resistance should mean higher prices for the stock, thus a long trade could be made. Short traders might look to enter a trade at the 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!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach