Discovery Communications Inc. (NASDAQ: DISCK)

Discovery Communications, Inc. operates as a media company. The company operates through U.S. Networks; International Networks; and Education and Other segments. The company owns and operates television networks under the brands, such as Discovery, TLC, Animal Planet, Investigation Discovery, Science, Velocity, Discovery Family, American Heroes, Destination America, Discovery Life, Oprah Winfrey network, Eurosport, DMAX, and Discovery Kids. Its content spans genres, including survival, exploration, sports, lifestyle, general entertainment, heroes, adventure, crime and investigation, health, and kids. The company also distributes content across various platforms, such as brand-aligned Websites, Web-native networks, on-line streaming, mobile devices, video on demand (VOD), and broadband channels; and operates radio stations and Websites.

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

1-year chart of Discovery (NASDAQ: DISCK)

DISCK has been taking gradual steps lower throughout the past year. Along the way, the $28 price level (purple) has become very important to the stock, specifically over the past 9 months. Not only was $28 a key support back in January and May, that level has also been hit as resistance a couple of times in August.

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The Tale of the Tape: DISCK has a key level at $28. A trader could enter a long position on a break above $28 with a stop placed under the level. However, if traders are bearish on the stock, a short trade could be made instead at the $28 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