Tempur Sealy International Inc (NYSE: TPX)

Tempur Sealy International, Inc., together with its subsidiaries, develops, manufactures, markets, and distributes bedding products worldwide. It operates through two segments, North America and International. The company provides mattresses, foundations, and adjustable bases, as well as other products comprising pillows and other accessories. It offers its products under the TEMPUR, Tempur-Pedic, Sealy, Sealy Posturepedic, Optimum, and Stearns & Foster brand names. The company sells its products through furniture and bedding retailers, department stores, specialty retailers, and warehouse clubs; e-commerce platforms, company-owned stores, and call centers; and other third party distributors, and hospitality and healthcare customers.

Take a look at the 1-year chart of Vera (NYSE: TPX) below with my added notations:

1-year chart of Vera (NYSE: TPX)

TPX has formed a key support level at $70 (green) over the past two months. In addition, the stock is declining against a short-term, down trending resistance level (blue). These two levels combined have TPX stuck within a common chart pattern known as a descending triangle. Eventually, the stock will have to break one of those two levels.

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The Tale of the Tape: TPX is sitting within its triangle pattern. A short trade could be made on a break of support or on a rally up to resistance. A long trade could be made at support or on a break through the triangle 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