Vulcan Materials Company (NYSE: VMC)

Vulcan Materials Company produces and sells construction aggregates, asphalt mix, and ready-mixed concrete primarily in the United States. It operates through four segments: Aggregates, Asphalt Mix, Concrete, and Calcium. The Aggregates segment offers crushed stone, sand and gravel, sand, and other aggregates, as well as related products and services. The Asphalt Mix segment offers asphalt mix in Arizona, California, and Texas. The Concrete segment produces and sells ready-mixed concrete in Georgia, Maryland, New Mexico, Texas, Virginia, Washington D.C., and the Bahamas. The Calcium segment mines, produces, and sells calcium products for the animal feed, paint, plastics, water treatment, and joint compound industries.

Take a look at the 2-year chart of Vulcan (NYSE: VMC) below with my added notations:

2-year chart of Vulcan (NYSE: VMC)

Over the past 3 months VMC has created a key level of support (red) at $85. That line is also the “neckline” for the stock’s head and shoulders (H&S) reversal pattern. Above the neckline you will notice the H&S pattern itself (blue). Confirmation of the H&S would occur if VMC breaks the support, and lower prices would be expected from there.

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The Tale of the Tape: VMC has formed a head & shoulders pattern. A long trade could be made at $85 with a stop placed below that level, but ideally, the pattern implies a short trade to be entered on a break below that level instead.

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