United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. It operates in two segments, General Rentals; and Trench, Power, and Pump. The company also sells new equipment, such as aerial lifts, reach forklifts, telehandlers, compressors, and generators; contractor supplies, including construction consumables, tools, small equipment, and safety supplies; and parts for equipment that are owned by the company’s customers, as well as provides repair and maintenance services. It sells its used equipment through its sales force, brokers, and Website, as well as at auctions and directly to manufacturers.
Take a look at the 1-year chart of United (NYSE: URI) below with the added notations:
Although URI has been in an overall downtrend for the past year, the stock has always found time to embark on significant rallies. Since October, the $60 (green) and $65 (red) price levels have become very important to URI. You will notice on the chart that both prices have been support and resistance. Now that URI is stuck in between them, several potential trading opportunities are present.
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The Tale of the Tape: URI has a key levels at $60 and $65. A trader could enter a long position on a pullback to $60, or on a break above $65, with a stop placed under the level of entry. However, if traders are bearish on the stock, a short trade could be made instead on a break of the $60 support.
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