ResMed Inc. (NYSE: RMD)

ResMed Inc. develops, manufactures, distributes, and markets medical equipment for the diagnosis, treatment, and management of respiratory disorders with a focus on sleep-disordered breathing (SDB). Its products include airflow generators, such as CPAP, VPAP and AutoSet systems for the titration and treatment of SBD; and masks, motors, and diagnostic products. The company also offers accessories and other products, such as humidifiers, carry bags, and breathing circuits, as well as data communications and control products, including EasyCare, ResLink, ResControl, ResControl II, TxControl, ResScan, and ResTraxx modules that facilitate the transfer of data and other information to and from the flow generators. ResMed Inc. markets its products to sleep clinics, hospitals, home healthcare dealers, and third-party payers. The company sells its products through a network of distributors and direct sales force in approximately 100 countries internationally.

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

1-year chart of ResMed (NYSE: RMD)

For the past 9 months RMD has essentially been trading in a large, sideways move. More recently, the stock has created an important level of resistance to watch at $60 (red). RMD has already tested that level a couple of times since the end of November. A break above that $60 level should lead to higher prices for the stock.

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The Tale of the Tape: RMD has a key level of resistance at $60. A long trade could be entered on a break through that level. However, if you are bearish on the stock, a short trade could be made on any rallies up to $60.

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