Cognizant Technology Solutions Corporation provides information technology (IT), consulting, and business process services worldwide. The company operates through four segments: Financial Services, Healthcare, Manufacturing/Retail/Logistics, and Other. Its consulting and technology services include IT strategy consulting, program management consulting, operations improvement consulting, strategy consulting, and business consulting services; and application design and development, systems integration, enterprise resource planning, and customer relationship management implementation services.
Take a look at the 1-year chart of Cognizant (NASDAQ: CTSH) below with added notations:
After rallying nicely from October of last year up to June of 2015, CTSH started trading mostly sideways thereafter. While in the sideways move, the stock formed two important price levels to be aware of. The first level to notice is the resistance at $64 (red). The other level CTSH created would be the $58 support (green).
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The Tale of the Tape: CTSH is trading between two key price levels. The possible long positions on the stock would be either on a pullback to $58 or on a breakout above $64. The ideal short opportunity would be on a break below $58.
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