Carbo Ceramics Inc., an oilfield services technology company, manufactures and sells ceramic proppants, resin-coated ceramic, and resin-coated sand proppants for use in the hydraulic fracturing of natural gas and oil wells in the United States and internationally. The company also provides fracture simulation software under the FracPro brand, as well as offers hydraulic fracture design and consulting services under the StrataGen brand. In addition, it provides for spill prevention, containment, and countermeasure systems for the oil and gas industry. The company principally sells its products and services to operators of oil and natural gas wells, and oilfield service companies.
Take a look at the 1-year chart of Carbo (NYSE: CRR) with the added notations:
CRR has been on the decline for quite some time now. However, over the past two months the stock tested the $15 level (red) as support on multiple occasions, thus creating a very important 52-week low support at that mark. Now that the $15 level has been broken, the stock should be taking another step lower.
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The Tale of the Tape: CRR broke a key level of support at $15. A trader could enter a short position on any rallies up to or near $15 with a stop placed above the level. If the stock were to break back above the $15 level, a long position might be entered 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!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach