Dycom Industries, Inc. provides specialty contracting services in the United States and Canada. The company offers a range of specialty contracting services, such as engineering, construction, maintenance, and installation services comprising placement and splicing of fiber, copper, and coaxial cables to telecommunications providers. It also provides underground facility locating services, including locating telephone, cable television, power, water, sewer, and gas lines to various utilities, which comprise telecommunications providers. In addition, the company offers tower construction, lines and antenna installation, and foundation and equipment pad construction services for wireless carriers, as well as equipment installation and material fabrication, and site testing services; and installs and maintains customer premise equipment, such as digital video recorders, set top boxes, and modems for cable television system operators.
Take a look at the 1-year chart of Dycom (NYSE: DY) below with my added notations:
DY has hit resistance at $80 (red) multiple times over the past couple of months. In addition, the stock has been climbing a trend line of support (green) since the beginning of September. Eventually, the stock will have to break either the $80 resistance, which would be a 52-week high, or the trendline support.
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The Tale of the Tape: DY is winding up between two key levels. A long trade could be made at the trendline support or on a break above $80. A break below trendline would be an opportunity to enter a short trade.
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